Chinese Auto Parts Enter the Global Market

Auto parts are one of China’s fastest growing industrial exports, and more than half go to the US, the world’s largest market for automobiles. The rise in these exports are part of a larger trend, as China moves away from exporting basic items such as textiles and shoes toward more valued industrial goods. Such production means higher wages for Chinese workers, but also puts the nation in competition with other traditional auto-parts manufacturers. Multinational automakers impose the same standards for their operations regardless of the location, and managers work closely with Chinese companies to meet the strict standards. Another competitive advantage emerging for China, now the largest steelmaker in the world, is low costs for raw materials. Some automakers still hesitate to rely on China for all auto parts, with worries stemming from uncertainty over shipping costs, rising wages and the currency-exchange rate. Zhao Qingjie – who survived the Cultural Revolution, taught himself to fix tractors and now manages one of the largest manufacturers of automotive starters and alternators – points out that “entering the US market is one of our key strategies.” With such manufacturers intent on creating jobs and proving their industrial prowess, consumers probably won’t have long to wait for Chinese cars to hit the global market. –YaleGlobal