Solid Height - Spring Manufacturers Institute

that number, the top 10 transnational components
suppliers, such as Delphi and Bosch, hold 10-15
percent of market share. The Chinese top 10 component
manufacturers in sales, by comparison,
together account for less than 11 percent of the
domestic market, Timeroute reports.
Growing Pains
However, the sharp rise in investments has a
downside. Recently, Kai Ma, Minister of the National
Development and Reform commission, told the official
Xinhua news agency that there was a serious
problem of overcapacity in 11 fields of industry,
including automotive. He added that steel prices
have even at times dropped below production costs,
and auto industry capacity has outgrown demand
by two million units.
Xiaohua Qiu, Deputy Commissioner of the
National Bureau of Statistics, said on Chinese TV
that the basic reason for overproduction was limited
to Chinese buying power. China’s rapid development
in the past years largely relied on foreign investment
instead of domestic market needs. When those
investments resulted in over capacity, there was not
enough local demand. Despite increasing annual
investment growth, the growth rate of domestic
consumption has been leveling off in recent years,
he said.
Meanwhile, in addition to new foreign competitors
and inadequate local demand, Chinese
springmakers have to overcome their technology
problems. For example, China still lags the West in
metallurgy.
“Many raw materials must be imported from
overseas,” says George Zhu, sourcing team manager
of Valeo Asia Purchasing Office. “As a result, there
are no price advantages when exporting to European
and American markets.” Valeo is a U.S.-based auto
parts supplier.
Currently, Valeo’s purchases in China only
account for around three percent of its global
volume. Springs account for about five percent of
Valeo’s China purchases. “We hope to increase the
quantity, but there are difficulties,” says Zhu. “The
improvements needed are how to reduce related
costs to enable the prices to be more competitive.
Generally speaking, it does not work very well.”
According to Richard Anderson, a partner in
Hangzhou EAR Information Technology Inc., a training
consultancy based in Hangzhou, China, many
Chinese manufacturers have still not learned to
adjust material composition through heat treating
and other metallurgical techniques. “Some of the
large spring, stamping and forging industries have
begun to modernize their equipment but have not
done much modernization in training. Most of the
small and mid-sized enterprises have done little to
modernize either their technology or training. Consequently,
they don’t understand the meaning of
making quality,” says Anderson. He was previously
employed by Associated Spring in Plymouth and
Ann Arbor, MI.
Another disadvantage of Chinese springmakers
is their limited design ability. “Today, Chinese
springmakers still mainly produce products according
to the blueprints provided by the clients, instead
of designing the blueprint according to the requirements
of clients,” says Andy He of Associated Spring
Raymond China. “As a result, the clients may have
a lot of choices and advantages over the negotiation
of prices.
TRW Automotive is one of the many auto parts
manufacturers that turn to joint ventures because
of quality concerns. “Generally we evaluate a supplier
in three aspects: quality and management,
prices, and services,” says William Wang, TRW’s
Asia Pacific strategic sourcing commodity manager.
“Local springmakers have advantages with prices
but are not so adequate in other aspects.”
TRW now has more than 10 joint ventures in
China. Its list of spring purchases includes torsion
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