Some industry insiders think global materials manufacturers' near monopoly on supplying to China's joint venture automakers looks a little like protectionism. But others say the trend is proof that engineering and technical support trumps low cost for automotive manufacturers.
``The global [original equipment manufacturers] standards are that of global materials suppliers,'' said Tang Ruilin, a senior engineer with TJ Innova Engineering & Technology Co. Ltd., an automotive engineering firm connected to Tongji University in Shanghai. China's joint venture manufacturers are often required by the global partner to use the same suppliers the global manufacturer uses at home.
And it doesn't matter if they could buy cheaper resin from Chinese suppliers.
``The domestic price can be 50-100 percent cheaper than global materials suppliers,'' Tang said.
But Tang also said domestic materials suppliers manufacture few of the engineering plastics used in the automotive industry.
Materials purchasing managers contacted explained that it is difficult to put a price on the different engineering plastics used in automotive applications.
``Multinationals do engineering to make the materials suitable for automotive use,'' said one purchasing manager.
The design, testing and technical support of multinational materials suppliers like GE Plastics, BASF AG and Bayer MaterialScience AG is important to automotive procurement managers in China.
``Few domestic materials suppliers can offer these services,'' said Zhang Yue, senior engineer in product development at FAW-Volkswagen.
Zhang said most of the materials her company uses are supplied by multinationals, and that domestic materials suppliers, the subsidiaries of China's state-owned giants Sinopec, Sinochem and CNOOC Ltd., have not made a dent in market share because of lack of technical support and quality assurance.
Speaking in Shanghai at the Polypropylene Markets and Technology Conference, March 12-13, Zhang said the market opportunity for providing plastic materials to automotive manufacturers is huge, with each automobile requiring about 220-441 pounds of plastic.
Estimates show China's automotive materials market growing in the double-digits each year. With those numbers in mind, domestic materials suppliers all have plans to upgrade their facilities over the coming five years. Many now use technology from the 1970s, said Tian Zhenxin, a senior engineer at China's second- largest materials producer, Beijing Yanshan Petrochemical Co. Ltd., a subsidiary of Sinopec.
``Old facilities cannot cope with market demand,'' Tian said. She added that Beijing Yanshan replaced an older facility with 1970s technology in 2005, and has plans for three new production facilities to come on line by 2010.
But multinational players like GE Plastics still grab market share in China through teaching parts suppliers to use materials effectively.
Jack Zou, application development manager in the automotive division of GE Plastics in Shanghai, said his company supports domestic and multinational parts producers with part design, physical simulation, process suggestions and tooling design.
``It's value-added beyond the good quality of our materials,'' Zou said.
FAW-Volkswagen's Zhang said supplying this kind of technical support is the only way domestic materials suppliers can secure market share.
