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In the "Automotive Industry Development Policy," Chapter 8 focuses on the development of auto parts and related industries, covering three key areas: first, the future direction of parts manufacturers; second, macro-level management and investment strategies; and third, the growth of supporting industries. Recently, reporters spoke with industry experts to gather their insights on how these aspects are being implemented.
Article 30 of the policy emphasizes that auto parts companies should align with global industry trends and actively participate in product development for original equipment manufacturers (OEMs). In key automotive components, firms should gradually build system development capabilities, while in general parts, they must develop advanced R&D and manufacturing skills to meet both domestic and international market demands, aiming to join global supply chains.
Experts noted that while the policy lacks specific quantitative targets for the parts sector, it clearly outlines a strategic direction. The emphasis on OEM collaboration suggests a shift toward technology-driven partnerships. With over two decades of growth, Chinese parts companies have built solid manufacturing and management foundations, but enhancing R&D capabilities remains critical.
Currently, about 60% of procurement costs go to parts suppliers, making their involvement in OEM development a growing trend. New regulations on imported auto parts have increased pressure for localization, prompting joint ventures to seek local suppliers. For example, Shanghai GM is adopting an open approach, allowing parts companies access to product databases to support vehicle development.
Despite progress, many small and medium-sized parts firms still lack the necessary R&D capabilities. While some companies in Zhejiang have improved significantly through talent development and better management, around 90% of the 30,000+ parts companies in China fail to meet OEM requirements. Most need to enhance innovation to compete globally.
Article 31 introduces targeted plans for parts development, offering guidance and support to help companies achieve professionalization, mass production, and modular supply. Firms that can serve multiple OEMs and enter global markets will receive preferential treatment in technology imports, financing, and mergers.
Experts highlighted that government initiatives like special funds from the Development and Reform Commission, Ministry of Science and Technology, and Ministry of Commerce have long supported parts companies. E-commerce adoption and export R&D funding have already been encouraged. OEMs like FAW are pushing for domesticization, creating opportunities for local suppliers.
While much of this work was already underway before the new policy, it has now been formalized. Breakthroughs in high-tech areas like airbags and ABS show progress in China’s spare parts sector. The policy’s guiding role is more significant than its immediate impact.
Article 32 addresses related industries such as metallurgy, petrochemicals, and electronics, urging them to improve product quality and competitiveness. It calls for stronger steel supply, advanced mold design, and higher oil standards to support the automotive sector.
Experts noted that the mold and steel industries have made notable progress, though the rubber sector still lags, particularly in specialized products like seals. Oil quality development remains uneven, with debates over whether to follow international standards or prioritize diesel vehicles.
While the policy's direct impact on parts companies may be limited—many are already moving in these directions—other provisions in the policy could have broader implications. Vehicle regulations inevitably influence component development, as improving vehicle R&D depends on strong parts innovation. Independent intellectual property in both vehicles and components is essential.
For instance, import regulations have accelerated localization efforts, enabling tech investments in critical parts. Exporting vehicles faces certification challenges, but parts products typically encounter fewer obstacles. Targeted support for parts companies can yield significant benefits.
Overall, the policy reinforces existing trends while setting a clear path for future development in the automotive industry.