The newly released "Automotive Industry Development Policy" issued in June has elevated the importance of spare parts and related industries to an unprecedented level, leading some to claim that it "stands at the global automotive industry's height and clearly outlines China's zero-based development direction for the auto parts sector." For this opportunity, manufacturers and distributors of auto parts in Henan are not standing still. In recent interviews, many industry insiders expressed a sense of excitement, as if spring is finally here. “The production and distribution of auto parts in Henan already hold a significant position nationally,†said Liu Xiaoming, secretary general of the Provincial Automobile Industry Association. “Overall, the production of components is better than that of整车 (whole vehicles), and the circulation of parts is even higher than the national average.†He added that the new policy elevates the auto parts industry to a new level, presenting both opportunities and challenges.
Liu also pointed out that the development of the auto industry in Henan is still lacking. A key reason is that the foundation for spare parts is not strong enough. Without high-performance, high-quality components, it is impossible to build high-quality vehicles. There remains a big gap between China and developed countries in this area. An industry insider with years of experience in auto parts noted that although the new policy does not specifically mention "localization" or "domestication," it aligns with international trends and emphasizes meeting domestic and foreign market needs while striving to enter the global auto parts procurement system. This approach is more comprehensive and open compared to previous strategies, better reflecting China’s current status in the automotive industry.
To become a major player in the global automotive industry, China must develop system-level capabilities for critical parts. These should be provided by specialized component companies in a systematic and modular way to meet vehicle equipment requirements. This is a practice followed by developed nations. The idea that the new policy encourages the separation of parts and vehicles has sparked optimism among many auto parts manufacturers. One company CEO shared that he felt deeply about this change, calling it a rare opportunity to improve performance. “We haven’t joined any auto group and have remained independent. But I believe in full marketization and competition, which can not only improve product quality but also reduce costs and enable faster growth,†he said.
An economist highlighted two key conditions that Henan and China currently possess for developing the auto parts industry: first, some parts companies have achieved notable success; second, there is strong support from social forces, such as the military industry system, universities, and research institutes. Cities like Luoyang, Jiaozuo, and Nanyang in Henan have certain advantages in these areas. The new policy is also a boon for private enterprises, as it encourages the involvement of social capital in auto parts production, allowing more private players to enter the industry.
Henan’s auto parts distribution holds a crucial national position due to its strategic transportation location. The concept of "corporate alliances" mentioned in the new policy has been widely discussed among auto parts dealers recently. In fact, since last year, with the trial of several major auto parts companies across the country, Henan-based firms have started exploring new operational models, with chain operations becoming a successful path for many.
As a bridgehead and important transportation hub in the central market, the auto parts market in Central Plains has entered a fiercely competitive landscape due to its unique geographical position. Henan ranks fifth nationally in auto parts distribution, showing its significant role in the national market. However, the industry still faces challenges, such as individual combat, disorderly competition, scattered resources, and weak ability to withstand market risks—issues common across the country and a major weakness in the Henan auto parts sector.
At the Henan Auto Parts Chain Store Management Symposium, some experts noted that with the entry of foreign companies, traditional auto parts companies are finding their space shrinking. Merging strong players, implementing logistics and distribution, and adopting chain operations can help consolidate resources, gain scale advantages, and grow stronger. Corporate alliances can address inefficiencies in China’s fragmented competition, increase market concentration, and benefit both automakers and component suppliers.
For a single component company, limited development capabilities and funding sources may hinder growth. By joining an alliance, they can form a development center and establish a collaborative platform. The new policy emphasizes that enterprise alliances should cooperate extensively in R&D, production support, and sales services, aiming to optimize resource allocation, reduce costs, and achieve economies of scale. It encourages alliances to form economic entities linked by assets as soon as possible.
In response, one company has taken the lead in implementing chain operations within the province. An executive from an auto parts service company in Henan told reporters that the strength of this model lies in its scale, ensuring competitive pricing and quality service. It can successfully integrate scattered regional markets into a large, stable user base, gaining advantages that independent operators cannot match. Additionally, the warehousing, distribution, and inventory management of a chain network far surpass those of independent businesses. It allows for scientific use of warehouse liquidity, reducing material storage and capital occupation, and lowering operating costs.
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