A second wave of investment by global component suppliers is putting increased pressure on Chinese suppliers, many of which will not stand up to the competition, according to management consultants Roland Berger, reported in Automobilwoche.
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The supplier industry in China phases a period of consolidation and more than half of existing Chinese suppliers will not survive.
According to another study by KPMG the Chinese government has registered around 1,700 supplier companies, 450 of which have some foreign ownership. Automobilwoche reports that there is estimated to be another 3,000 supplier companies operating in China.
Global suppliers are investing heavily in China, but, according to a representative of ThyssenKrupp quoted in the article, the only way to fully protect any investment is to set up 100% owned subsidiaries. These are in direct competition with existing Chinese suppliers.
