‘Destroy if not up to standards’
Tuesday, July 3rd, 2007Back in the ’60s, not a few doubted made-in-Japan imports. Flowing into the US market at a surprisingly steady and frightening pace, quality concerns met the peak of Japan exports. Now, it’s China’s turn to answer similar quality concerns as made-in-China auto parts flood the US automotive industry.
Aftermarket auto part exports from China witnessed a more than six-fold increase in the last five years from 2002–2006, breaching the $1 billion mark in April 2007 and rising among the rapidly growing category of Chinese industrial product sold overseas.
Over half of these auto parts are exported to US followed by Europe and Japan. The increase in China’s aftermarket auto part exports is an aspect of a broader scenario. China is shifting its focus from producing essential goods such as shoes, textiles, and toys towards producing high-value industrialized goods as the production of high-value goods provide better wages.
Rising output levels at Chinese aftermarket auto assembly plants are generating a huge demand for auto parts and creating the economies of large-scale production that was earlier possible only in North America, Europe and Japan.
Car exports to follow aftermarket auto parts
Chinese auto parts would soon find a demand in overseas markets not just in crates but also as part of fully assembled cars as several Chinese automakers are planning to export in the coming few years, said an RNCOS report titled “China Automobile Industry Forecast.”
RNCO, a global industry research firm, said Chinese auto parts in the aftermarket segment of the automotive industry would witness a good growth in the near future as global manufacturers look for local sourcing of the components. Domestic producers are looking for avenues of growth in the export market.
The report added that the revenue generated by the Chinese auto part market in the year 2005 to 2006, covering auto engines, parts, tyres and other related product exports, respectively generated foreign exchanges of approximately $22 Billion.
China’s shift from light to heft
To date, the Chinese government’s efforts to cultivate national champions in higher-end industries such as autos, aircraft and semiconductors have met with mixed results. Haier has carved out a profitable niche in the USA selling small refrigerators and other appliances. But Chinese automakers have penetrated only less competitive markets such as the Middle East.
US companies, which operate their own factories in China and use Chinese suppliers, say they employ rigorous safeguards to ensure that their goods are sound. Goodyear Tire & Rubber, for example, puts potential suppliers through an intense “process audit” of its production system and quality controls before placing its first order, Goodyear spokesman Ed Markey says.
‘If it doesn’t meet the standards, it’s destroyed’
Goodyear suppliers also must obtain a certification called “ISO 9000,” which attests to a company’s use of consistent quality procedures and must be periodically renewed.
The tiremaker has a corporate office in Shanghai, which allows it to maintain close oversight of a Chinese tire factory in nearby Hangzhou. That supplier began producing tires for Goodyear in the middle of last year, for sale in the USA under private-label brands, not the Goodyear name, Markey says.
Each tire that comes off the Chinese assembly line is individually balanced and visually inspected. “If it doesn’t meet the (Goodyear) standards, it’s destroyed,” Markey says.




