Solid Height - Spring Manufacturers Institute

T oday,
Chinese Spring Industry Perspective
Though some Chinese springmakers are investing in technology and
quality, most are still focusing on low-end production
most Chinese springmakers still lag
behind their rivals from advanced countries
in research, technology and management. Their
most competitive products are mainly those with low
added value. Meanwhile, rising raw material prices
and transportation costs, together with increased
competition, all contribute to compressing the profit
margin of local players.
High-Tech Springmaking
To sustain profitability, some of the more innovative
local companies have begun to invest in research
and new technology, and bring in modern management
practices.
For example, China Spring Factory, a subsidiary
of the Shanghai Automotive Corporation Ltd., began
as a private workshop in 1937 before becoming a
state-owned enterprise in 1949, when the People’s
Republic of China came into being. At the beginning,
the firm produced small springs for mining,
electronic and mechanical use. Its big-
gest leap in technology and scale
took place in 1989, when the
Shanghai Automotive Co.
launched its popular
Santana car model and
demand for springs skyrocketed.
Today, China Spring
Factory has established
long-term business relationships
with almost all
foreign automotive joint ventures
in China, including GM, Chrysler, Volkswagen,
Audi, Citroen and Renault. Its products
now include automotive coil springs, engine valve
springs, stabilizer bars, die springs, shaped springs,
disc springs, various stampings and a wide range of
precision wire springs.
In addition, China Spring Factory has successfully
entered overseas markets. “In 2004, we
exported 400,000 units of springs. The volume
catapulted to two million units in 2005. We expect
even bigger growth in 2006,” says Eric Xie, company
spokesperson. “Our overseas markets are mainly
the U.S. and Europe, which make up one-third of
our current sales.”
Investment in quality and technology was crucial,
Xie says. “Our progress is closely related to huge
By Maria Trombly
Source Media, Asia Bureau
According to the
China Spring Industry Association,
there are over 1,100 mid-sized and larger
springmakers in China. Among them, 13 are
wholly foreign owned, and 60 are joint ventures.
The latter, though less than seven percent of
all spring manufacturers, accounted for
one-fifth of total output.
Global Market Update
investments in R&D capability, staff training, quality
control, and examination and testing facilities, with
support from leading universities in China as well
as foreign partners such as CHKK and Scherdel,”
he says, referring to the Japanese Chuo Spring Co.
and German springmaker Scherdel GmbH.
However, price still remains a major competitive
advantage, he adds, given that labor is much
cheaper in China than elsewhere, and increasing
sales volume helps to reduce per-unit production
costs even further.
The Price Factor
Meanwhile, most auto parts manufacturers have
not yet made research and development a top priority
or have the ability to do so. A survey by the China
Association of Automobile Manufacturers shows
that, despite increasing investments
in facilities, manufacturers spent
less on research in 2004 than
2003, only accounting for
1.75 percent of sales in
2004. The survey covered
more than 750 auto parts
manufacturers of large
size in China. (The 2005
results won’t be available
for several more months.)
As a result of slow investment
in technology and other
factors, many Chinese springmakers
concentrate on the domestic market.
ZheJiang Jinsheng Spring Co. Ltd, located in the
southern Zhengjiang province, is a mid-sized private
company specializing in manufacturing spiral,
helical, square and rectangular springs. Its annual
growth rate over the last two years was between 20
percent and 30 percent, according to the company,
but exports only accounted for 10 percent of total
sales.
Company sales manager Xingchao Huo says
competition and shipping costs limit exports. Most
springs produced still have low added value. Because
of the high proportion of raw material costs, the
profit margin is mainly generated from low labor
costs. However, the low investment required for
SPRINGS July 2006 7