Li Yongzheng: How to Export Parts After Wintering?

Recently, the United States International Trade Commission made a definitive damages ruling on China's special insurance for passenger cars and light truck tires, that is, determined that China's tire imports a large number of imports, causing or threatening the US domestic industry market disorder. Earlier this year, India, Brazil, Argentina, and other countries have already imposed anti-dumping measures on China’s export of fasteners and tires.

As we all know, China's auto parts have an inherent advantage in terms of exports. Lower labor costs and preferential export policies have been stimulating the development of auto parts exports in China. With the advent of the financial crisis, the automobile manufacturing industry in various countries has been severely hit. While governments in various countries are increasing their support for the domestic automotive industry, international trade protection has begun to rise.

At present, the slowdown in the growth of the auto market has allowed domestic auto makers to reduce purchase orders for parts and components, and some countries set up non-technical trade barriers to China's auto parts exports is a stick. As a result, the original diversified income of some companies disappeared, and some of these companies were in trouble, which undoubtedly worsened the living environment of parts and components companies and entered the “winter winter” at the dawn of summer.

Take tires as an example. Last year, China produced a total of 170-180 million tires, of which half were exported. The United States is the largest exporter of Chinese tires, with a total annual output of 46 million, and sales revenue of 1.7 billion US dollars. As the main source of profit for major tire listed companies in China, the national sales volume of all-steel radial tires in 2009 will reach about 57 million, of which 30% will be used for export. The profit of this part of export products is higher than that of domestic matching products. This decision of the Trade Commission means that all profits will be lost. As the international auto market has not recovered, the export volume of China's auto parts and accessories market will continue to decline. However, the huge overseas aftermarket is still the driving force for China's auto parts exports this year.

How should China's auto parts export companies “winter”? In fact, with the deepening of China's reform and opening up, similar incidents in international trade will increase. We must look at it correctly and rationally. If such problems are encountered, related companies should "group together" to cope with each other. It is even more necessary to proceed from their own initiative to find out the "causes" and prescribe the right medicine.

China's auto parts exports today cannot be blamed on the world, but also have their own problems. First of all, in the process of opening up overseas markets, there is a lack of communication among Chinese corporate counterparts, and they are fighting each other. In order to win over customers, they will not hesitate to conduct vicious competition through price cuts. The result will only be a lose-lose. This seems to have become the "illness" of the parts industry.

Followed by our lower product quality. In recent years, there have been changes in the environment at home and abroad, and the demand for automotive parts and components has become higher and higher. It is no exaggeration to say that products are "backwardly beaten." Although in recent years, local auto parts companies have continuously intensified their technological transformation and strived to improve product quality, the author believes that the speed is not fast enough, the investment is not enough, the added value of the exported products is low, and the resources are consumed. It is precisely because of this that our enterprises often become the "eyes" in some foreign counterparts. Therefore, efforts to improve product quality, increase product technology added value, strengthen industry self-discipline, and change low-price competition will be the main strategies for export companies to cope with the crisis and anti-dumping.

Happily, after this crackdown, some auto parts export companies have begun to seize this opportunity to launch a national auto industry restructuring and revitalization plan, focus on R&D investment, improve product quality, and move toward high-end products, becoming passive and active. This should be the best way to cure the "illness."

It should be noted that in today’s financial crisis, the measures that national governments have intentionally or unintentionally built to prevent trade barriers and protect the domestic auto parts industry are, after all, phased. As a highly globalized industry, disputes over international trade in auto parts and components will eventually be solved step by step in the tide of globalization. In addition to efforts to improve product quality and own strength, China's parts and components companies must maintain the relationship with their major customers and actively strengthen communication with counterpart companies in exporting countries in order to win international trade. It is also crucial to establish your own image.

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