Suppliers should be cautious when they enter China because production capacity is growing too fast there, said a senior Johnson Controls Inc. executive.
``[Original equipment manufacturer] consolidation is part of a long-term trend,'' said Garry Cardwell, general manager of Johnson Controls' Asia-Pacific operations. ``Overcapacity and market saturation is leading to price wars.''
Glendale, Wis.-based Johnson Controls supplies seats, instrument panels and other parts to 25 customers in Asia-Pacific regions.
Cardwell said foreign automakers are spending $13 billion to triple China's annual capacity to 6 million units by 2010. He cited analysts who say that the oversupply of the market will reach 23 percent in 2005.