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The Largest Global Spare Parts Company Entered into Chinese Market

By Fastener Magazine , 2015-04-14 02:15:38

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Based on the WTO Agreement, the overseas spare and accessory parts company can run a sole partnership factory in China by far. MAHLE Industry is known to take more than 50% stock shares of all its Chinese branches, such as holding 100% shares in its factories in Nanjing and Chongqing, 72.5% shares in its joint-ventured factory in Shanghai. These mean that MAHLE holds the dominant controlling rights to its Chinese factories. By means of taking over, MAHLE Industry gains a firm foothold in China and later develops into a stronger one due to its technological and capital advantages. Its new investment in China takes 10% of its global investment, which figure has the tendency to grow.

“To invest instead of making money, that’s truly what MAHLE Industry does brilliantly.” says a professional insider. MAHLE Industry fastens its entry into Chinese market by establishing its Chinese Technical Center in Shanghai after setting up 8 Component Manufacturing Plants in China.

As the largest global developing and manufacturing company for plungers, MAHLE Industry sells over 0.1 Billion CNY annually, while it assembles 10 million plungers in China for many domestic brands such as GM, Ford, Volkswagens, Nissan and Toyota, etc. However, Dr. Heinzk Junker, Global CEO of MAHLE Industry, announced that there are no profits by far after its 7-year running in China. “We use all the profits for investment, so did our plants, and our Technological Center.” He explained, and hoped that the company can gain profits in 3 to 5 years, after recovering its 0.1 billion CNY input into the Technological Center.

In fact, as a main supplier of plungers for Nissan, Volkswagen and GM, MAHLE shows its great developing trend in China in the past 4 and 5 years. It ranks secondly in the China plunger market and takes over 20% of the total market share.

“We can selectively lay down the final restriction to the overseas automobile companies while there are no restrictions in the field of spare and accessory parts.” said a senior specialist in this line. Thus, the oversea Giant companies will rely on their advantage of being as primary suppliers for many global enterprises, their advanced technology, and their enormous capital scale to occupy the Chinese market quickly and merge the accessory companies in China, leading to their monopoly in Chinese market.
 
Based on the statistics from the China Automotive Industry Association, the annual demand of components in auto industry has reached 80 Billion CNY while the trade volume has reached at least 240 Billion CNY. Meanwhile, some insiders pointed out that the average profit rate can reach to 30% in this insufficiently competitive Chinese spare parts market. That’s the true reason why MAHLE Industry sacrifices its short-term profit and pays attention to its long-term development. What Dr. Heinzk Junker said exactly reflects its aim of expansion.
 
The local component enterprises worry about the overseas entry into Chinese market. Some insiders indicate that not only will the automobile factories, but also the spare parts companies influence the lifeline of China Automobile Industry. In this respect, local enterprises should endeavor to grow stronger and larger.

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