Serving the World's Largest Emerging Automobile Market
Home > EDITORIAL > The truth about “Made in China”

The truth about “Made in China”

According to CBU’s research based on passenger vehicle registration data over the period of 2005-2011, Chinese brands in terms of annual sales volume were ahead of foreign brands assembled in China except for the years 2007 and 2008. Chinese brands benefitted greatly from the government’s stimulus policy in 2009 and 2010 and clenched almost 30 percent of the entire PV (not including microvan) market.

However, market shares of Chinese car brands have been declining over the past couple of years to under 25 percent in June and July of 2013. This has been the result of global OEMs in China moving into the entry-level vehicles in direct competition with local carmakers in the compact segment. Vehicle registration restrictions in large cities have also driven consumers away from local makes to larger and more expensive foreign brands.

But what worries Chinese automotive executives as well as government officials is the increasing content of foreign-branded key parts and components in Chinese-made cars. It is already a known fact that a large number of Chinese cars are powered by foreign-branded engines and transmissions. Mitsubishi engines assembled in China, for example, have been used in cars and SUVs of most of the local Chinese brands, such as Zhonghua, Great Wall, BYD, Foton, Zhongxing, etc. Automatic transmissions used in Chinese brands are without exception foreign makes.

Although China boasts the world’s largest internal combustion engine manufacturer and local OEMs have invested heavily in developing their own engines over the past 30 years, engines developed and “made in China,” similar to whole vehicles under Chinese brands, have been shunning local Chinese content because of quality issues and turning to multinational suppliers for engine components that China has been making for decades.

Wang Binggang, a retired automotive engineer and former director of China Automotive Technology and Research Center (CATARC), was flabbergasted to learn that Great Wall’s independently developed 2.0L engine over the past three years is using a large number of ordinary parts and components from multinational suppliers even though they can be sourced from domestic suppliers.  

Wang could understand why Great Wall’s engine uses Delphi’s electronic injection system, BorgWarner’s turbocharger and timing belt and Ina’s VVT because domestic suppliers are not yet able to make such systems. But what baffles him is Great Wall’s choice in using Eaton’s engine valve, TP Goetze’s valve seats, Bosch’s spark plug, Federal Mogul’s piston and bearing, ATG’s piston rings, Litens’ belt tensioner, Pierburg’s turbocharger pressure valve, etc. Wang simply does not believe that these engine components that he was familiar with 50 years ago “when I was a young man working at FAW” are still not up to Great Wall’s engine quality standards.

Wang believes that the situation reflects China’s awkward level of technology in the internal combustion engine industry. In a larger picture, this shows that the real challenge for Chinese-branded OEMs in growing their market share and building their branding image is how to achieve technological breakthroughs in making key parts and components, especially engines and transmissions, so that they can really claim that their vehicles are made in China by genuine Chinese manufacturers.

| | | | | |

Leave a Reply