Xingbin Li Chief Representative AMT China

1
Xingbin LI Chief Representative AMT-Beijing
Representative Office China Market Update
Market Update Breakfast China September 8, 2006
2
CONTENTS

• The China automotive industry
• Production growth rate
• Opportunity
• Production capacity (current production,
  production capacity and expansion plan)
• Key automakers
• The China components industry
• Production growth rate
• Opportunity
• Demands (purchasing plans of major global
  automakers)
• New measures and tariff (technical barrier)
• Key suppliers (global suppliers and domestic
  suppliers)

3
Facts

• 4th Largest economy in the world in 2005
• GDP USD 2.263825 trillion
• GDP growth rate 9.9
• 2nd Largest auto market in the world in 2005
• Production 5.75 million units of vehicle
• Growth rate 13.4
• The largest machine tool market in the world
• USD10.9 billion
• Growth rate 15

4
The China Automotive IndustryProduction growth
rate
5
The China Automotive Industry Production
growth rate
Vehicles (Million of Units)
2002 2003 2004 2005 2006 (1
6) Production 3.25 4.44 5.07 5.75 3.63 Chan
ges, 38.8 36.6 14.2 13.4 28.9
Source China Auto Industry Year Book
6
The China Automotive IndustryProduction growth
rate

• China Car Productions
• (Million of Units)
• 2001 2002 2003 2004 2005 2006e
  (1-6)
• Production 0.7 1.09 2.06
  2.26 2.95 1.80
• Change 15.1 55.7 89.0
  9.7 30.5 46.9

7

• Production of Top 8 Chinese automakers
• from January-June, 2006 (in units)
• Shanghai Automotive Industry Corp
  621,400 54.85
•  First Automotive Works Corp 562,900 23.28
•  Dongfeng Motor Corp 454,200 26.1
•  Chang'an Motor Corp 369,100 8.39
•  Beijing Automotive Industry Corp
  337,100 11.94
•  Chery Automobile 144,200 72.15
•  Geely Automobile 105,900 55.62
•  Guangzhou Automobile 105,700
• (Source China Association of Automobile
  Manufacturers)

8
The China Automotive IndustryOpportunity
Production capacity

• Production in 2005 5.75 million units
• Production capacity in 2005 8 million units
• Production capacity expansion plan 16 million
  units by 2010

9
(No Transcript)
10
(No Transcript)
11
The China Automotive IndustryOpportunity - Key
automakers
12
The China Components IndustrySales growth rate
Components Statistics (
billion) 2002 2003 2004 2005 Total
Sales 34.2 47.9 62.7 71.9 Domestic 32.3
42.1 52.1 56.1 Imports 3.4
9.3 11.3 10.4 Exports 1.9
5.8 10.6 15.8 Average Annual Sales Per
Supplier 5.0 to 10.0 million
Source China Auto Industry Year Book
13
The China Components IndustryOpportunity -
Demands

• Daimler-Chrysler (for China operation)
• To spend 840 million in buying parts in 2008
  (100 million in 2005)
• BMW (for China operation)
• To spend 300 million in buying parts in 2007
• Volkswagen (for overseas operations)
• To spend 1.0 billion in buying parts in 2006
  (300 million in 2005)
• Volkswagen (for China operations)
• To spend 2.5 billion in buying parts in 2006
• Multinational firms totally (for overseas
  operations)
• To spend 35 billion in buying parts by the end
  of 2007

14
The China Components IndustryOpportunity New
tariff

• Cars
• Displacement 2001 2002 2003 2004 2005 2006
• lt3.0 L 70 43.85 38.2 34.2 30.28 25
• gt3.0 L 80 50.7 43 37.6 30.3 28.25
• Parts Components
• 2001 2002 2003 2004 2005 2006 10

15
The China Components IndustryOpportunity New
measures

• Measures for the Administration of Import of
  Automobile Components and Parts Featuring
  Complete Vehicles
• Promulgated by the Customs of China, MOC, MOF and
  NDRC on April 1, 2005
• Go into effect on July 1, 2006

16
The China Components IndustryOpportunity New
measures Key Points

• Article 21 - Under any of the following
  circumstances, the imported automobile components
  and parts shall be considered bearing the
  features of a complete vehicle
• Importing CKD or SKD to assemble automobiles.
• The total price of the imported components and
  parts is not less than 60 of the total price of
  the complete vehicle type.
• If, within the scope as prescribed in Article 4
  of the present Measures
• Importing both the vehicle body (including the
  cab) assembly and engine assembly to assemble
  vehicles
• Importing either the vehicle body (including the
  cab) assembly or engine assembly and 3 or more
  other assemblies (systems) to assemble vehicles
• Importing 5 or more assemblies (systems) other
  than the vehicle body (including the cab)
  assembly and the engine assembly to assemble
  vehicles.

17
The China Components IndustryOpportunity New
measures-Key points

• Article 22 - under any of the following
  circumstances, the imported automobile components
  and parts shall be considered bearing the
  features of an automobile assembly (system)
• Importing whole sets of KD components and parts
  to assemble an assembly (system)
• Importing key components and parts or
  sub-assemblies to assemble an assembly (system),
  and the import of key components and parts or
  sub-assemblies reaches or exceeds the specified
  quantity.
• The total price of the imported components and
  parts is not less than 60 of the total price of
  the assembly (system)

18
The China Components IndustryOpportunity New
measures

• Measures REALLY means that
• Discouraging automakers from using imported car
  parts for vehicles they assemble in China and
  making car by CKD SKD increases production cost
  (from 10 to 25)
• Creating an incentive for car parts makers to
  shift production to China

19
The China Components IndustryOpportunity
changes for global suppliers

• From shareholding to share controlling
• From JV to WOFE
• From market penetration to market monopoly

20
Where are the Major Component Suppliers Located
in China?
Northeast (Jilin, Liaoning)
Greater Beijing area (Beijing, Tianjin)
Yangtze river delta (Shanghai, Jiangsu, Zhejiang)
Middle China (Hubei)
Southwest (Chongqing, Chengdu)
Pearl river delta (Guangdong, Fujian)
21
The China Components IndustryOpportunity key
suppliers

• Major global suppliers
• ASIMCO
• Eaton
• Delphi
• Dana
• TRW
• Visteon
• Lear
• BorgWarner
• Johnson Controls
• Bosch
• Siemens VDO
• ThyssenKrupp
• GKN
• Freudenberg
• Faurecia
• Valeo
• Aisin Seiki

• Major domestic suppliers
• FAW Fawer Auto Parts Co.
• Dongfeng Motor Co., Ltd Parts Components
  Business
• Wanxiang Group
• Sanhua Holding Group
• Wanfeng Auto Holding Group

22
Global Suppliers in China

• ASIMCO Parkview Center, 4/F, 2 Jiangtai Road
  (s), Chaoyang District 100016, P. R. China
• (86)10-6438-2750, www.asimco.com
• Asimco Meilian Braking System (Langfang)
  Co. Langfang, Hebei Province Air-compressor,
  brake
• Asimco International Costing Co. Jiang County,
  Shanxi Province Casting for engine block and head
• Beijing Asimco Tianwei Fuel Injection Pump
  Nozzle Co. Beijing Fuel injection pump, oil
  nozzle
• Zhong Ding Automotive Components Co Ningguo,
  Anhui Province Rubber products
• Nanyue Fuel Injection Pump Co. Hengyang, Hunan
  Province Fuel injection pump
• Sichuan Dan Chi Industry Co. Sichuan
  Province Transmissions
• Hubei Super-Elec. Auto Components Co. Shashi,
  Hubei Province Generators, starters
• Harbin Feibeng Auto-Elec. Co. Harbin,
  Heilongjiang Province Igniters, ignition coils,
  relays, switches
• Asimco Braking System (Zhuhai) Co. Zhuhai,
  Guangdong Province Disc Drum type brakes,
  vacuum boosters
• Asimco Braking Braking System (Guangzhou)
  Co. Guangzhou, Guangdong Province Disc Drum
  type brakes, boosters
• Asimco Shuangtai Components (Sichuan)
  Co. Sichuan Province Wheels
• Eaton Floor, 300 Huai Hai Zhong Road, Hong Kong
  New World Tower, Shanghai 200021, P. R. China  
• (86)21- 6278-5090, www.eaton.com

23
Domestic Suppliers in China

• FAW Fawer 245 Shenzhen Street, Economic
  Development Zone, Changchun, Jilin, P. R. China
• (86)0431-4659800, www.fawer.com.cn
• There are 23 manufacturing divisions/ companies
  under FAW Fawer Group.
• Dongfeng Motor Co., Ltd Parts Components
  Business
• 8 dong Bin Gu Tai, Dong Cheng Road, Shiyan
  442000, Hubei, P. R. China
• (86)0719-8221934, www.dfap.com.cn
• There are 17 manufacturing/companies under
  Dongfeng Motor Co. Ltd Parts Components
  Business.
• Wanxiang Group Wanxiang Road, Xiao Shan
  District, Hangzhou, Zhejiang, P. R. China
• (86)571-82832999, www.wanxiang.com.cn
• There are 8 manufacturing/companies under
  Wanxiang Group making auto parts and components.

24
New Service How AMT China Helps you

• China Market Penetration Strategy Development
  Session
• Designed to help those AMT members who are new to
  China and want to develop their companys sales
  marketing strategy for todays China

25
New Service How AMT China Helps you

• Review Session for your Existing China Market
  Penetration Strategy
• Designed to help YOU validate and invigorate your
  existing Sales Marketing Strategy for todays
  China

26

• Thank you!

27
(No Transcript)