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“Auto Parts Export†is a topic that has a strong attraction for more than 10,000 auto parts companies in China – an unprecedentedly broad market, vicious competition from domestic trade, and the shaping of international companies. However, under the vague “export†concept, finding the right entry point is the most important. Is it the export of the aftermarket AM market, or is it trying to obtain OE support for the entire vehicle, or is it to OEM for the first-tier supplier? Is it quick to seize the best market for Middle East, South America and Africa, or to accept the baptism of demand from European and American buyers? There are actually many different levels of auto parts exports. How do companies choose their most accurate entry point?
Choose the most appropriate entry point
According to the usual view, the domestic mainstream OE companies are only suitable for entering the international complete vehicle market. The original small and medium-sized auto parts companies that sell after-sales are only suitable for the foreign AM market. Is this true? A purchasing manager of a multinational automaker told the reporter that, in fact, the domestic auto parts industry is in a high-speed survival and fittest condition, coupled with frequent capital operations, auto parts companies are rising and falling quickly, and companies doing after-sales service are also hopeful to support the development of the entire vehicle. The OE companies have also experienced a gradual decline in their poor management, and they are no exception in the export of auto parts.
Wenzhou Day, which produces automotive electronic parts, is a typical small and medium-sized auto parts company that has grown up from the aftermarket. Interestingly, after the beginning of the use of e-commerce, different types of foreign purchasers, Rizheng, have almost come into contact with it: The Middle East auto parts wholesalers who have rushed to Wenzhou to take delivery of goods after bargaining, and the European and American small and medium-sized companies that have certain requirements for quality Wholesalers, AutoZone, the largest aftermarket auto parts store chain in the United States, and Tier 1 supplier giants such as Bosch, which is looking for OEM manufacturing, and even European and American vehicle companies.
In the auto export market that is full of variables, e-commerce has increased the richness of supply and demand. Everyone has the opportunity. SMEs also have the potential to enter the complete vehicle package through their efforts. The mainstream OE companies can also enter the European and American aftermarket. However, “seeking the most appropriate entry point†is not a dogma. Capabilities, resources, and demand as well as short-term, medium- and long-term strategies of companies will become the important basis for auto companies to choose their export business.
Wenzhou's small and medium-sized auto parts manufacturer, Okaya, which produces filters, once focused on the aftermarket in the Middle East and Africa because of the high turnover rate and short negotiation cycle. However, after Okejia grew up, he decided to attack the markets of Europe, the United States, and Japan. Because the ability has reached a higher level, the company has a higher pursuit. Auto parts companies can also try several different levels of exports at the same time. After Wenzhou Rizheng gave up the Middle East market, it had more contacts with small and medium sized auto parts traders in the United States and was still communicating with AutoZone. It was also talking to Bosch about a product model of the OEM. While AUO’s offensive vehicle for OE vehicles in Europe and America, the AM market has also been placed in a strategic focus because it is in a state of overcapacity, and the high-end aftermarket in Europe and America can bring stable profits.
In short, whether there is a long-term and pragmatic export strategy will be the basic conditions to determine the success of auto parts companies.
OE, AM big difference
After determining the direction, we must fully understand the differences between the OE and AM exports. Otherwise, they may fail. Chen Yilong, Asia Pacific director of the American Automotive Industry Action Organization (AIAG), told reporters that many companies have sent samples to foreign OE orders and they have waited for several months without reply. They complained that these companies did not realize the OE procurement and AM procurement at all. The fundamental difference. The essence of OE procurement is the selection of long-term strategic partners by OEMs. In addition to operating losses, they may even smear the brand of the automaker. How can this procurement be completed by sending samples?
Shi Wenkai, CEO of Gasgoo Automotive, stressed that auto parts companies must learn to treat OE and AM differently. The multinational vehicle OE purchase cycle is long and the volume of procurement is large. Once it is determined as a long-term supplier, it will not be easily replaced. In general, OE purchasers will assess the major items of Chinese companies' experience, equipment, management, R&D, and cost control.
For such inspections, auto parts companies should focus on the results of the process. The inspection process lasts for a period of one or two years, and as many as four or five years, some companies may not be able to tolerate it. However, far-sighted auto parts companies will see its significance because such purchases not only bring high sales returns, but also the auto manufacturers It will provide technical guidance to supporting companies and even provide management support. Therefore, it is worthwhile to consider the costs incurred during the inspection in the long run.
AM procurement should lightly process results. AM buyers often pay attention to product prices. Of course, they do not care about product quality and performance. As long as product quality is ensured, the product is manufactured in any way, or which company is not the decisive factor. There are few requirements for the matching experience and management required in OE procurement. Therefore, the focus of AM procurement on suppliers is to ensure timely delivery, abide by the principle of good faith, and try to cooperate with various procurement requirements. However, except for some large European and American AM purchasers, they will also interfere with the supplier's production process to ensure product quality and reputation.
View related topics: Commercial Vehicle Export Analysis
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Export of Auto Parts: Success or Failure of Strategic Decision
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