PN China Blog - English: Auto Archives

Inergy builds plant in Beijing

As most automakers in China report healthy sales growth amid the global downturn, Paris-based Inergy Automotive Systems is building a plastic fuel system plant in suburban Beijing.

According to a media report from Qianlong, the company is investing a total of 300 million yuan (US$43.9 million) in the plant located in the Beijing Auto parts Industrial Base in Shunyi district, a suburb northeast of Beijing. The first phase of the project will cost 120 million yuan (US$17.5 million), cover a factory complex of 21 mu (150,685 square feet), and is expected to start production by the end of this year, creating more than 100 jobs and generating annual sales of 300 million yuan (US$43.9 million). The company has secured contracts from Hyundai's Beijing operation.

Inergy is a joint venture between Cie. Plastic Omnium of France and Solvay SA of Belgium. Its first manufacturing facility in China went on stream last summer, with reported annual capacity of 400,000 parts.

Posted by Nina Ying Sun on February 23, 2009 11:43 PM | Permalink | Comments (0)

China subsidizes rural auto market

In an effort to further boost its domestic market, China is expanding its rural purchase incentive programs for appliances and electronics to include automotive vehicles as well. Farmers will receive reimbursements of up to 5,000 yuan (about $730) per vehicle on purchases of light trucks or minivans and up to 650 yuan ($95) per unit for motorcycles, according to the Finance
Ministry.

Beijing continues to subsidize both domestic and foreign brands in its rural purchase incentive programs. General Motors Corp.'s mini vehicle joint venture, SAIC-GM-Wuling, is believed to be one of the biggest beneficiaries of the plan. The joint venture claims it supplies half of the Chinese market for light vehicles.

The "cars to the countryside" plan will cost the government 5 billion yuan ($730 million) and is expected to boost vehicle sales by more than 1 million units this year, which will help to push China's total auto sales above 10 million units for the first time.

Auto supplies such as Lingyun Industrial Corp. also will benefit from the plan, Chinese media said.

Posted by Nina Ying Sun on March 17, 2009 11:26 AM | Permalink | Comments (0)

Executive hints possible expansion at Kautex

In a speech at the recent Asia Manufacturing Forum 2009 in Beijing, an executive from Textron Inc., parent company of blow molder Kautex Textron GmbH & Co. KG, said the company is considering further investment in China.

Martin M. Lin, president of Textron China, said the expansion will support the increasing demand from the nation's automotive industry, according to a transcript of his Chinese speech provided by 163.com. He didn't go into details.

"Our China team achieved 30 percent cost reduction by redesigning tools and work flow," he said, "Localization also helps our customers increase added-value."

Kautex makes plastic fuel tanks at its factories in Changchun, Shanghai and Guangzhou.

Posted by Nina Ying Sun on November 11, 2009 6:36 PM | Permalink | Comments (0)

Luxury car sales boom in China

China's 93 percent year-over-year growth rate for auto sales in November bodes well for all car makers and suppliers. And the icing on the cake goes to luxury vehicles.

According to the Wall Street Journal, compared to a year ago, Mercedes-Benz tripled its November sales in China to 8,900 cars, and Audi more than doubled to 16,503. Audi AG has said it expects China to surpass Germany and become its largest sales region in 2012 or 2013. BMW AG also said sales in China were up 40 percent, to 8,470 cars.

Posted by Nina Ying Sun on December 8, 2009 3:27 PM | Permalink | Comments (1)

China XD to supply compounds to electric vehicles

Nasdaq-listed China XD Plastics Co. Ltd. has signed agreements to supply annually 2,000 metric tons of compounds that will be used in the production of electric vehicles by Hafei Automotive Group and unnamed automakers in Taiwan.

China XD said it started the R&D of products for electric vehicles this year and in July signed an exclusive development agreement with auto molder Hafei Dongyang Plastic Products Co. Ltd.

The new product has been approved by automakers for use in battery casings of electric cars, the company said in a news release.

The company noted the market potential for such plastic products backed by the Chinese government's plans to invest 100 billion yuan (US$15 billion) in the next decade to develop clean energy and green vehicles.

China XD, Hafei and Hafei Dongyang are all headquartered in Harbin, Helongjiang province.

Posted by Nina Ying Sun on October 11, 2010 10:03 AM | Permalink | Comments (0)

Forbes' best listed family business

Two plastics firms made the latest Forbes' top 50 listed family companies in China.

Janus (Dongguan) Precision Components Co. Ltd., majority-owned by the Wang Jiuquan family in Dongguan, Guangdong province, was ranked 21st. The company was founded in 2003 and launched an initial public offering in May 2010 at ChiNext, a Nasdaq-style growth enterprises board hosted by the Shenzhen Stock Exchange.

Janus makes precision electronics components and molds for leading OEMs including Samsung, Huawei and Haier. Samsung alone represents more than half of Janus' revenues.

Over the past three years, Janus has seen sales grow at a compounded annual rate of 69 percent and net profit 36 percent.

Also included in the list is auto compounder Shanghai PRET Composites Co. Ltd., coming in at 36th. The company was founded in 2007, went public in December 2009, and is majority-owned by the Zhou Wen family.

Sales grew 15 percent annually and net profit 64 percent for PRET in the past three years, reflecting the healthy demand of the booming Chinese auto industry.

According to the first "Chinese Family Business Survey" by Forbes China magazine, as of the end of June, a total of 305 family businesses are listed companies on the Shanghai and Shenzhen stock exchanges, accounting for 36 percent of the total number of listed private enterprises.

The survey shows that the listed family businesses beat listed state enterprises in terms of sales growth and profitability.

More than 60 percent of the polled entrepreneurs hope to have their businesses inherited by the second generation.

Posted by Nina Ying Sun on October 12, 2010 12:57 PM | Permalink | Comments (0)

Boom time for auto suppliers

The growth of China's auto parts market is projected to outpace that of vehicle sales during the next five years, a boon to plastics suppliers serving China's auto sector.

According to a report by the Shanghai Securities, in the first eight months of 2010, domestic auto parts sales topped 1 trillion yuan (US$150 billion), 46 percent higher than a year ago. Industry-wide profit totaled 82 billion yuan (US$12 billion), up 82 percent from the same period of 2009.

Demand for auto plastics compounds rose 19 percent this year, an analyst from KGI Securities said.

Publicly listed Jiangnan Mould & Plastic Technology Co. Ltd., a leading manufacturer of bumpers, recently reported a 37 percent revenue increase in the first three quarters.

Li Yingang, an analyst with Soochow Securities, said the auto parts industry will witness higher growth than automakers in the next five years. Meantime, Chinese auto suppliers will gain global competitiveness.

In fact, China exported US$33 billion of auto parts and components from Jan. to Oct., showing a 44 percent year-over-year boost, based on latest data from the China Association of Automobile Manufacturers.

China is the world's largest auto manufacturer and the largest new vehicle market. Auto sales are likely to beat previous forecast and reach 18 million units this year, CAAM said this week.

Posted by Nina Ying Sun on December 14, 2010 3:13 PM | Permalink | Comments (0)

Tian'an builds interior trim factory

China's plastic processors are trying to get their share in the booming auto parts market. PVC film manufacturer Foshan Tian'an Plastic Co. Ltd. is doing just that by building an auto part plant in Guangdong province.

The 11-year-old firm will invest 150 million yuan (US$22.5 million) in the new factory, which is expected to start making interior trim products in 2012. The company sets the 2014 sales goal for the new factory at 1 billion yuan (US$150.2 million), according to a report from Chinese media New Express.

The privately owned company claims 500 million yuan (US$75.1) of annual output and 800 employees in its existing operation.

It aims to secure venture capital investment in the first part of 2011, and also hopes to launch an IPO within two years.

Tian'an said it started to tackle the auto market in 2009, when it signed a partnership agreement with Japan's Okamoto Corp. Okamoto supplies such products as blended PVC foam, TPO foam, PVC/Urethane foam, PVC coated fabric to Japanese automakers.

Automakers in China still import a large amount of interior parts from overseas, which Tian'an sees as a great opportunity for local manufacturing of higher-end products.

In order to compete with more established global suppliers, company officials told Chinese media plans to strengthen its R&D by hiring international experts and postdoctoral researchers.

Posted by Nina Ying Sun on December 17, 2010 5:19 PM | Permalink | Comments (0)

Fanuc launches new Shanghai factory

Industrial robot manufacturer Shanghai-Fanuc Robotics Co. Ltd. has launched a new plant in Shanghai's Baoshan district. Fanuc claims to be the only company that uses robots to make robots.

The new plant sits on a campus of 37,900 square meters and touts an investment of US$16.8 million.

Construction started in November 2009 [as we reported here], and was completed by November 2010.

The Sino-Japanese JV said the new facility has designed annual capacity to make 3,800 sets of robot systems, 1,400 injection molding machines as well as CNC machines.

Annual sales are forecasted to reach 1 billion yuan (US$151 million).

SGM-Dongyue Auto, a joint venture unit of Shanghai General Motors, announced plans to purchase 250 robots at Fanuc's opening ceremony last month.

Posted by Nina Ying Sun on January 6, 2011 5:10 PM | Permalink | Comments (0)

"Best year" for China's machinery makers

While emerging markets like China fueled the recovery and growth for Western plastics machinery makers in 2010, their Chinese counterparts also claimed an unprecedentedly successful year.

Latest stats show that the output of the Chinese plastics machinery industry reached 30 billion yuan () in the first three quarters of 2010, up 73 percent from a year ago. During the same period, the overall industrial machinery industry in China only grew 35 percent.

In fact, 2010 is the best year in history for plastics machinery, according to Su Dongping, general secretary of the China Plastics Machinery Industry Association. She was quoted in China Industry News.

In the meantime, China has greatly reduced its dependency on imported high-end plastics equipment. Imported plastics machinery accounted for more than 50 percent of China's market in 2008, Su said, but that percentage has dropped to 29 percent in the first three quarters of 2010.

Take injection molding machines for auto parts as an example. Su said Chinese auto suppliers used to import machines from Japan. In 2009, Japan exported 2,000 mid-to-large tonnage presses to China, 80 percent of which for the auto industry. But the situation is changing, Su noted, as upgraded Chinese machines rapidly replace the share of imported machines.

The report didn't specify on the role of plastics machines assembled by Japanese and Western transplants in China, which could a factor in the reduction of imported machines.

Posted by Nina Ying Sun on January 10, 2011 5:22 PM | Permalink | Comments (0)

Changshu aims to grow auto industry

As China's auto market continues to rapidly expand, local governments are putting in place plans and policies to attract auto-related business. Having already convinced Toyota to set up its China R&D base there, Changshu of Jiangsu province is trying to leverage that and draw suppliers.

"The Yangtze Delta region houses 60 percent of China's auto suppliers and 90 percent of the mold and equipment manufacturers. Changshu is strategically located in the center of the Yangtze River delta with highway, river transportation and seaport," a Toyota official was quoted as saying.

Toyota established the wholly owned Toyota Motor Engineering & Manufacturing (China) in November to focus on developing vehicles that meet the needs and wants of Chinese consumers. The company expects to eventually grow the R&D staff there to 1,000, according to a recent Nikkei Business report.

Changshu officials pledge to provide "the best business environment and living environment" to business, particularly small and midsized ones.

Electronic components maker Bi Technologies is in the process of building a plant in Changshu. It is crucial for small and midsized companies to choose the right industrial cluster with the right mix of companies for an overseas site, an official commented.

Posted by Nina Ying Sun on September 2, 2011 3:51 PM | Permalink | Comments (0)

How big is your year-end bonus?

Nothing says more about China's booming auto market than the generous bonus given by the FAW-Volkswagen Automotive Co. The joint venture carmaker awarded its employees with a bonus that equals to 27 months of salary. On top of that, employees also received double salary for eight months this year.

The news broke in the online community with an internal PowerPoint file posted by an anonymous user. Other online users said that employees who logged full attendance this year could have received up to 63 months of salary.

The Legal Evening News then contacted FAW-VW and confirmed that the file was authentic and the facts were true.

I used to think that type of pay structure - annual total income equally many times of base salary - only happens in the financial sector. Boy, I was wrong.

The trend of pay increases in the past five years is phenomenal. In 2007, FAW-VW gave employees double-salary for two months of the whole year. That number has since been on the rise steadily - five months in 2008, six months in 2009, seven months in 2010, and eight months in 2011.

In an attempt to play it down, FAW-VW explained to the Legal Evening News that base monthly salary only accounts for about a third of the total take-home monthly income. The year-end bonus is 27 months of base monthly salary, not 27 months of total monthly income. The source added that a "normal employee" (meaning non-managerial?) has 3,000 yuan of monthly base salary.

It's ambiguous whether the double pay is included in the "take-home monthly income" the source referred to. If it is, a "normal employee" would have taken home 189,000 yuan (US$29,814) in 2011. That is equivalent to about $39,752 (pre-tax, assuming 25 percent tax rate) in the U.S.

If the double pay is NOT included in the "take-home monthly income," a "normal employee" would have taken home 261,000 yuan (US$41,141) this year. That is equivalent to about US$54,854 (pre-tax, assuming 25 percent tax rate) in the U.S.

Keep in mind, also, that the FAW-VW workers are located in cities like Changchun and Chengdu, where living expenses are relatively low.

Is my calculation correct? If the average Chinese worker at an auto plant makes that much, no wonder many Chinese consumers are now able to afford soaring property prices, overseas vacations and education, and luxury goods.

Now, if you didn't get a fat bonus like that, perhaps it'd be smart to think about how to get into a business that serves China's new middle class and wealthy groups.

Posted by Nina Ying Sun on December 22, 2011 5:44 PM | Permalink | Comments (0)