On one side, there are impressive exhibition halls of international auto parts giants like Bosch, Continental Automotive Group and Toyota Boshoku and on the other side, a lot of domestic parts enterprises were crammed into cells; in the exhibition halls of foreign enterprises, audience can not only watch the latest core products of auto parts, but also know the most frontier technologies in the industry; however, in the exhibition cells of most domestic enterprises, audience can only view the products with low-end technologies like wheel hub and rubber products. It was the scene saw by the reporter on the 5th China International Auto Parts Expo held from September 8 to 10. And such a scene also reflects to some extent the "predicament" of the auto parts industry in China.

And where does the problem come from?

"Firstly, there still exists serious redundant development, which leads to poor concentration of production." Li Kaiguo, vice president of China Automotive Engineering Research Institute, points out that the total output value of the auto parts industry in China reached to 1.64 trillion yuan in 2010, but it was created by 30,000 auto parts enterprises and the average output value was no more than 60 million yuan for every enterprise. Obviously, the situation of "small" and "scattered" enterprises has still not been changed.

"If the status of redundant development and 'scattered' distribution is not improved effectively, it will be more and more difficult to solve the problem of disorderly market competition. If the malicious competition is so aggravated as to hinder the establishment of auto parts enterprise group on the basis of systemic development and modular supply, it will be harder to set up strategic cooperation among finished-automobile enterprises, suppliers, assembly factories and parts factories.�� Fu Yuwu, executive deputy director and secretary general of Society of Automotive Engineers of China, makes an analysis that due to lack of the sense of responsibility for progress together and mutual and win-win benefit, the chain of supply is not so solid and the unstable and simple supply-demand relation leads to the disadvantageous subordinate status of parts suppliers when cooperating with the purchasers. On his opinion, the failure to set up strategic cooperation relation between finished-automobile enterprises and auto parts enterprises is an important reason for why the auto parts industrial level of China is hard to be enhanced.

The total investment keeps increasing in the auto industry of China, but that for parts is obviously not enough, which restricts to some extent the improvement of R&D ability of enterprises.

According to the statistics of China Automotive Industry Yearbook, the total investment in the auto industry of China was 759 billion yuan from 1986 to 2009, among which 509.3 billion yuan was invested to complete automobile, but only 200 billion yuan in parts. In view of the above, Dong Jianping, deputy secretary general of China Association of Automobile Manufacturers says that the investment in parts is generally higher than the one in complete automobile in developed countries. The investment ratio between finished automobile and parts should be 1:1.3 to 1:2, but presently it is only 1:0.3 in China, which is far from enough. As for enterprises, the R&D investment in core parts technologies is also insufficient. According to survey, a lot of complete auto enterprises of China make no more than 1 percent investment in parts.

Without enough R&D investment, enterprises feel difficult to acquire strong R&D ability. Society of Automotive Engineers of China conducted a survey for 135 backbone auto parts enterprises in 2009 and indicated that nearly 60 percent enterprises thought that what the purchasers require the most was that the supporting enterprises enjoyed the capability for new product development based on the complete process of demand. However, for most enterprises being surveyed, localization of the introduced technologies and products is still the most common method for product development. For instance, they can introduce technologies and products for adaptive development, reverse development or imitative development. Obviously, such a situation shows that there is still a long distance from the growth rate of R&D ability of the domestic parts enterprises to the industrial requirement.

"At the same time, we should also note that the current problem of parts industry does not emerge in one day and in fact, both the two auto industrial policies issued by the country are all involved with this problem." Fu Yuwu said that in the auto industrial policy of 1994, it proposed to support 50 small parts giants and gave them a series of preferential policy; the China auto industrial policy of 2004 also proposed to specially support auto parts development. "However, the basic situation of parts industry has not been changed so far and in some aspect, the technical distance is even longer and longer." Why? Fu Yuwu believed that another reason is that we do not have a definite strategy for the development of parts industry.

One expert says that due to there is no capital proportion restriction, in recent 10 years, the number of foreign-funded parts enterprises entering China in the method of sole proprietorship is much more than that before the entry of WTO. Under such a background, some foreign parties in joint parts venture entering China before the entry of WTO request Chinese parties to relinquish shares and seek for sole proprietorship or holding status. Some domestic-funded auto parts enterprises with high fame and certain competitiveness in the industry also joined the wave of joint venture but vanished later in the course of development. Taking auto air conditioner as example, Japan Denso, the US Delphi, etc. have occupied the major part of the auto air conditioner market in China and the formerly famous auto air conditioner enterprises in China just disappeared.

"Under the condition that in spite of the large gap between the domestic and foreign parts enterprises, the national and local governments still keep a lot of preferential terms for foreign-funded enterprises, there must be a new concept for the development of the domestic auto parts enterprises." Fu Yuwu appealed that "now we should consider the parts industry in the level of national strategy and really give it support and policy guidance."