Tempted by the Chinese government’s decision to give management control to foreign investor, who picks up 5 per cent equity in state-owned auto firms, domestic companies are planning to enter China by forging joint ventures.
Chinese market offers a huge potential to auto component manufacturers as a lot of consolidations are taking place there, Auto Component Manufacturers Association (Acma) vice-president, Deep Kapuria, said here on Friday.
There is also a potential to source components from China, particularly small volume parts, Mr Kapuria said.
“Indian companies can also invest in China and put up manufacturing plants,” he added.
The Chinese government has taken this decision to revive the auto component companies, most of which are on the verge of becoming sick. These firms lack resources as well as technology.
The importance of the Chinese market could be assumed from the fact that the Chinese companies make more than 10 times the total commercial vehicles produced in India.
Chinese companies have installed very high capacities. The foreign MNCs have poor capacity utilisation and higher prices, while the local companies have low technology.
At present, Japanese, Korean and German component manufacturers are present in China through joint ventures, Mr Kapuria said. There is also no need to be apprehensive of Chinese competition at present, he added.
China’s cost advantage is not across the board. While in some components, they were 30 per cent cheaper, in many products —made by Indian component manufacturers, Chinese costs were lower only by 5 to 10 per cent and even higher. Acma had led a 15-member delegation to China recently. The visit, Acma’s third one, coincided the auto show in Beijing.
Acma was conferred the ‘outstanding partner’ award 2002 by the Japan external trade organisation (Jetro).
The award had been given for Acma’s contributions to Jetro’s activities in India, especially for the development of auto component suppliers. Jetro is the official trade and investment promotion organisation under the Japanese ministry of economy.
|
