SHANGHAI: Suppliers see growth opportunities in China

By just-auto.com editorial team | 20 April 2011

It's still boom time in China not only for vehicle makers but western component suppliers as well. TRW of the US believes its sales in the country will more than double in two years, France’s Valeo also aims to double sales over the next five years while Schaeffler of Germany expects its China sales to grow between 30 to 40% this year.

TRW will make its biggest-ever investment in China this year, building at least five new factories and a second technical centre, John Plant, chairman, president and CEO, told Reuters on the sidelines of the Shanghai show.

The company was exhibiting at the show for the first time and Plant said: "In 2011, just in capital equipment and machinery in plants, we are going to invest more than US$100m."

Its customers in China range from General Motors and Ford to domestic automakers including Guangzhou Automobile and Chery.

Plant said increasing regulations on safety, the wealth effect and safety consciousness in China will boost demand for TRW products.

"People tend to buy more sophisticated and expensive vehicles and so want a higher level of safety equipment.”

TRW's revenue rose 24% in 2010 to US$14.4bn, of which up to US$1.5bn was from China. Plant expects total revenue to hit a record in 2011, surpassing a pre-crisis high of about US$15bn in 2008.

The company generated about 50% of its sales from Europe and 30% from the US last year. Plant added: “During the next decade, I expect sales in China will become bigger than those in the US."

TRW has 14 manufacturing plants in China. Plant said the new factories will boost this to 19. Its planned technical centre is scheduled to open in 2013 with a staff of 1,000 engineers, who will supplement its existing Asia Pacific technical centre in Shanghai.

Valeo China president Christian Marsais said his company is looking to double sales in the country to US$2bn over the next five years and will invest up to US$726m over that period.

Schaeffler plans to invest US$700m in China over the next four to five years, as it speeds up its expansion.

Asia Pacific chief Wilfgang Dangel said: “"We have already invested about US$700m in China from 2000 and 2010, we will probably invest the same amount in the next four to five years."

Schaeffler has five fully owned production facilities in the country and that will more than double to 11 in 2015 by which time China will account for 15% of its global sales, rising from less than 2% in 2006.

Dangel said China had suffered little impact from the global economic downturn.

"When you talk about the slowdown here, it's not the definition of slowdown as we know from North America and Germany, it's still growing."

Schaeffler and Skoda and Schaeffler have recently unveiled a concept electric car equipped with Schaeffler's power train and Dangel said there are business opportunities in China where the government will invest more than US$14.8 bn to subsidise its fledgling green car industry over the next 10 years.

The company has just set up an E-mobility team in China, heavily focused on automotive business.