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Since the 1980s, the internationalization of multinational corporations has emerged a new trend: Many internationally important products or businesses are no longer directly produced or operated by the parent company's establishment of a branch company in an exotic region, but through international subcontracting. Forms are handed over to enterprises in other countries for production, and they only purchase and check products or services with the identity of the contractor, and then assemble the finished products or provide the final service to the users. As a result, a company can also form an international production and management network. With this network, it is possible to optimize resource allocation globally and provide more cost-effective products. The process or method of internationalization through business subcontracting has been seen by the economic community as an "external sourcing" process. English is used for outsourcing, and Chinese is mostly translated as "outsourced". Our earlier study believed that according to the interpretation of foreign economic circles, Translated into "exogenous" when more appropriate.
First, auto parts products: multinational companies "exogenous" typical products
Historically, the “exogenization†of Western companies has been naturally linked with the automotive industry from the very beginning. Due to the severability of the production of this industry in time and space, it has become one of the preferred industries for the “exogenous†enterprises. Before the "World War II", the global auto industry's production model was represented by Ford in the United States, taking a highly concentrated or highly integrated model in space. Relevant data show that Ford’s pre-war production model is that, apart from iron ore, coal and other upstream products and raw materials for iron and steel smelting, other downstream production processes are almost entirely organized within the company. That is to say, from the smelting of metal materials to the heat treatment of components, from the milling and stamping of metal blanks to the welding of components, from the assembly of automobiles to the painting and shipment of hundreds of processes, all within one company. In this regard, Paul Krugman said with exaggeration that Ford Company “eats coke and ore at one end and spits a car at the other endâ€. After World War II, this highly concentrated production model began to undergo profound changes. In the 1970s, Japan’s Toyota Motor Corp. pioneered the subcontracting system, and changed the traditional methods of the American auto industry tycoons such as Ford and General Motors. Instead of placing all aspects of automobile production under the production system of the company, some non- The core manufacturing process is separated from the company's business, subcontracted to thousands of professional manufacturers for manufacturing, or purchased directly from other parts of the world. The company only controls the manufacture of key components, vehicle assembly, sales, and core technologies. R & D and other services. As a result of this innovation, Toyota has achieved a significant expansion of scale and technology in the short term. Toyota's success has enabled this model to be favored by automakers all over the world and quickly adopted. In the early 1990s, global automobile manufacturing generally adopted separate production methods for complete vehicles and parts.
At present, almost all automakers around the world have adopted a wide range of "exogenous" organizational models to expand non-core production processes and even R&D touches from domestic to major regions in the world. They subcontract the design and manufacturing of parts and components, purchase the most competitive products from around the world, and search for parts suppliers globally. International authoritative organizations estimate that the current automakers in Europe, America and Japan have an average self-sufficiency rate of only 30%, and they continue to decline. The relevant report of the WTO (1998) pointed out in earlier years that in the United States General Motors production, 30% of the total cost of a vehicle comes from assembly processes in South Korea, 17.5% from Japan, spare parts and advanced technology, and 7.5% from Germany. Of the designs, 4% came from gadgets provided by Taiwan and Singapore, 2.5% from UK marketing campaigns, and 1.5% from Ireland and Latin America. This means that only 37% of the cost is provided by the U.S. manufacturers, of which the final price offered by the car's final manufacturer is even lower!
In the past 20 years, with the rapid development of China's basic industries, especially the manufacture of mechanical and electrical products, the auto parts industry has suddenly emerged as an important target industry for the “exogenous†automotive manufacturing business of multinational companies. United States, Europe, Japan and other parts of the global procurement of auto parts manufacturers are reaching out to China, and have a rapid expansion. According to the latest research report from Merrill Lynch, an internationally renowned investment consulting firm, General Motors is expanding its procurement of parts and components in China. The company predicts that from 2003 to 2009, GM's auto parts purchases in China will increase from more than 200 million U.S. dollars to about 4 billion U.S. dollars. The senior management of Ford Motor Company expects that the company’s purchases in China will increase rapidly from the current US$350 million to US$6 billion in 2010. At the same time, China’s abundant and cheap labor force and the growing automotive market are attracting the attention of auto parts manufacturers around the world. Auto component manufacturers have moved to China to expand direct investment in China. Relevant statistics show that at present, at least 70 of the top 100 auto parts suppliers in the world have business in China. The total number of wholly foreign-owned or joint venture companies that manufacture automobile parts in China has reached more than 1,200. Among them, Delphi, the world's number one component supplier, has established 15 sole proprietorships or joint ventures in China, while another giant Bosch has more than 150 automotive aftermarket maintenance service stations in China.
Second, the internationalization of Zhejiang auto parts industry: status quo and issues
In the recent 20 years of rapid industrialization, Zhejiang auto parts industry started almost from scratch, and then came a sudden rise, forming a large-scale industrial cluster. The data provided by the relevant departments indicates that by the end of 2003, Zhejiang had a total of more than 6,730 auto parts production companies, of which 704 were “above scale†enterprises and the output value was 39.78 billion yuan, accounting for 18.2% of the country. The product covers all five major types of component parts needed for vehicle manufacturing. Including automotive engine assemblies, brakes, crankshafts, universal joints, drive shafts, hubs, instrument clusters, vacuum boosters, suspension assemblies, filters, and more. The production of auto parts has also formed a regional “block economy†in Zhejiang. Among them, the most concentrated are Wenzhou Ruian, Taizhou Yuhuan, Shaoxing Yuyao and Shangyu. The annual sales of auto parts products in these gathering places are few billion yuan, and many are more than 10 billion yuan. Among Yuhuan only places, the annual sales of auto parts products account for one-tenth of the national auto parts market share. Yuhuan has thus become China's first auto parts industrial base approved by the China Association of Automobile Manufacturers.
There are four pillars in the Zhejiang auto parts industry market: one is the domestic matching market, especially the leading automobile industry. At present, almost all vehicle manufacturers in China are dependent on Zhejiang auto parts products. Among them, FAW, Dongfeng, and SAIC are among the top three automakers in China. In recent years, about half of China-made components have been purchased from Zhejiang; the other is the domestic auto sales and service market. In recent years, with the rapid popularization of family cars and agricultural trucks, the automotive service industry has developed rapidly, and the demand for parts and components in the industry has also increased significantly. The third is the international OEM market, namely the OEM market. At present, Wanxiang, Wanfeng Auto and other companies have formed strong competitiveness in this market; the fourth is the international automotive after-sales service market. In this market, the requirements for parts quality and procurement processes are not as stringent as in the international market, and this has become the main market for export of auto parts products in Zhejiang.
The export of Zhejiang auto parts products mainly has four characteristics:
The first is that both export value and export price have risen at the same time. This contrasts with clothing and general machinery and electronic products. Statistics show that from 1998 to 2004, the export value of auto parts products increased from US$57.06 million to USD7.7924 million, an increase of 12 times. During the same period, the average price of export products increased to approximately US$3.5 per kg. It shows that the foreign trade conditions of this industry have greatly improved.
The second is that the main exporters are private enterprises. This contrasts sharply with the export partners of auto parts in coastal areas such as Guangdong, which are mainly foreign-invested companies. In 2003, the export value of auto parts of Zhejiang's private enterprises accounted for more than half of the province's total. Since 2004, this proportion has further risen and is currently close to 60%.
The third is that there are many export companies, so the single scale is small. In 2004, nearly 700 companies exported auto parts products, of which more than 500 exported less than 1 million US dollars, accounting for nearly 80% of the total.
Fourth, the export market is dominated by North America, the European Union, and Southeast Asia. Among them, the United States has the most. In 2004, Zhejiang exported more than 300 million U.S. dollars to U.S. auto parts products, more than doubled year-on-year, accounting for more than 45% of total exports.
One of the major trends in the export of Zhejiang auto parts products is that it has increasingly been incorporated into the “exogenous†system of Western multinational corporations and has become an important supplier of the “exogenous†business of European and American auto parts distribution giants. This is in line with the comparative advantage of Zhejiang's production of “light, small, and labor†products, which has greatly contributed to the rapid development of Zhejiang auto parts industry in the initial stage. However, due to the fact that Zhejiang auto parts companies are still in the position of low-end suppliers in the industry chain, they have also exposed many problems in the process of seeking development and actively participating in the exogenous transnational corporations. Among all issues, the following four issues are more prominent:
The first category is technical. As a whole to evaluate, the production of auto parts products in Zhejiang has low technical content and the degree of informatization is not high. At present, major auto parts manufacturers in the world have applied aerospace, aerospace and electronics technologies to auto parts and assemblies. Safety, power, energy-saving and environmental protection technologies are widely used in automobile manufacturing. However, the main exporter of auto parts in Zhejiang is mainly private enterprises. The investment in R&D capital is relatively insufficient. The exports are mostly counterfeit and plagiarized products. Therefore, the common parts account for a large proportion of the export of parts and components (more than 1/3), and the core components are exported. The proportion is small.
The second type of problem shows the internal and external capital grafting. Compared with Beijing, Shanghai, Guangdong and other auto parts regions, the auto parts industry in Zhejiang attracts insufficient foreign capital, and the lack of grafting of domestic and foreign investment has led to a low proportion of parts and components exported through processing trade. This is not conducive to the industry's ability to use multinational corporations to obtain improved products. At present, the world’s nine largest automotive multinational companies, including GM, Ford, Volkswagen, Toyota, and BMW, have entered China. The major auto parts companies in the world also follow the OEM’s to invest in domestic factories or establish technical cooperation with domestic parts factories. . However, the latest data shows that Zhejiang automobile parts and components are exported in the form of processing trade, and the total amount is only about 10 million US dollars, accounting for less than 8% of the total value of exports.
The third type of problem is manifested in management. The overall management and management level of Zhejiang auto parts companies is relatively backward. Many small and medium-sized private enterprises have not escaped the workshop-style management mode. They do not have a specific document management system to manage orders and translations, are not familiar with confidentiality agreements, and have not achieved international certification for the quality management system of the automotive industry (eg, QS9000, TS16949, etc.). These are the basic conditions that must be possessed by multinational companies as OEM suppliers.
The fourth problem is the market. Zhejiang's auto parts companies generally suffer from the so-called “two squeezes†dilemma in production costs. One end is the upstream market. The prices of upstream steel products and energy products are steadily increasing, which drives up the production cost of auto parts companies. On the other hand, the downstream vehicle manufacturers continue to push down the prices and promote procurement. This two-headed squeeze has led to a continuous decline in the profits of the auto parts industry.
Although auto parts companies can rely on the exogenous transnational corporations to achieve export expansion, the problem is that it is difficult to promote further internationalization by simply relying on export trade instead of achieving leapfrog development in management and technology.
Third, the use of "exogenization" to achieve internationalization: the success path of auto parts industry
As mentioned before, business exogenization is the trend of the development of the contemporary international automobile manufacturing industry. For auto parts manufacturers, it is a wise choice to comply with the trend of exogenous automotive giants and to seek out the expansion of their exogenous businesses. In fact, at present, exports of Zhejiang auto parts products have mostly been incorporated into the exogenous global procurement system of multinational corporations. For Zhejiang auto parts manufacturing companies, entering the “exogenous†system of multinational companies is undoubtedly the first step toward internationalization. Facts have proved that through this step, the internationalization leap can be achieved in the end, and the higher level of internationalization is the transnational corporatization of the company itself. It is worth noting that the successful implementation of the internationalization of Zhejiang enterprises happened in the auto parts industry. Among them, the Wanxiang Group's practice is the most successful and the most typical.
We know that Wanxiang is a typical success of the internationalization of private enterprises recognized by the domestic economic and business communities. Since the beginning of its internationalization strategy in the mid-1990s, Wanxiang has so far established more than 20 mergers and acquisitions and equity participation companies in eight countries including the United States, Britain, Australia and Canada, and has initially formed the framework of a multinational corporation. However, when we look at Wanxiang’s internationalization road a bit, it is not difficult to find that the internationalization of this company has generally followed the path from an exogenous low-end contractor to an “anti-guest-based†international operation. Specifically, the internationalization process of Wanxiang Group has gone through four key steps: The first step is to take orders from foreign auto parts dealers for “exogenous†orders. According to the “Factory History†material of Wanxiang Group, in 1984, the plant received the first overseas car universal joint orders and began to enter the international market. In the more than ten years since then, Wanxiang has relied on overseas orders to expand exports. Most of these orders belong to the “exogenous†business of European and American auto parts distribution companies. The most important foreign buyer in the US market is Schoeller.
The second step: set up overseas marketing agencies to sell products directly in the target market. In 1994, Wanxiang established the first overseas marketing agency in the United States, established closer ties with US auto parts distributors, and achieved initial internationalization; the third step was “anti-guest†and acquired overseas auto parts distribution. The company achieved a leap from the low-end contractor of the exogenous business to the middle-end buyer, and entered the “exogenous†procurement system of the leading automotive companies in the United States. In 2000, Wanxiang acquired Scheele Company, a well-known automobile spare parts distribution company in the United States, and thus broke into the externalization intermediary link between automobile manufacturers and parts manufacturers; Step 4: "Main" auto parts Product distribution is the core business, achieving multinational diversification and establishing a multinational corporate structure. In 2001 Wanxiang successfully acquired 21% of UAI, a Nasdaq-listed company, and became the largest shareholder. This move not only enabled Wanxiang to acquire the patented technology of the acquired company, improved the manufacturing capabilities and product quality of Wanxiang China, but also capitalized on the original brand and sales channels of the acquired company to penetrate the mainstream Western market. And gradually promote the "universal" brand.
Wanxiang Group's way of participating in exogenousization and eventually achieving internationalization shows that auto parts companies can fully start from participating in exogenousization and realize internationalization based on me. For many auto parts companies in Zhejiang, we should seize the opportunities of current foreign companies to produce “exogenousâ€, start with low-end suppliers, and gradually enter the middle-end and high-end supporting systems; start from the overseas after-sales market and actively contract with OEMs. Business, and finally to achieve anti-customer-based international leaps.
To achieve the above-mentioned leapfrogging, Zhejiang auto parts companies must have better "basic" work. In the early stages of participating in foreignization, we should grasp the following "joint points":
The first is the emphasis on product quality and self-discipline export behavior. Quality is the lifeline of an enterprise, which is especially important in the early stages of exogenous development. Like other "Zhejiang goods", Zhejiang auto parts industry is not only affected by counterfeit, fake and inferior products, but also suffers from disorderly competition in the industry. Objectively speaking, enterprises must firmly grasp the transnational company's exogenous business, not only must work hard to improve product quality, but also should regulate their own export behavior, and should not press down prices and kill each other.
The second is to pay attention to intellectual property protection. It is necessary not only to protect the company’s independent intellectual property rights, but also to respect and protect the intellectual property rights of others, in particular, the intellectual property rights of foreign companies that are the outsourcers. This point is an important guarantee for long-term acquisition of exogenous services.
The third is to take the joint road. As mentioned earlier, an important feature of the Zhejiang auto parts industry is the large number of companies with a small average size, which is not conducive to the development of economies of scale. In the era of globalization, it is very difficult for these micro-enterprises to go alone and it is very difficult to obtain the transnational company's exogenous business for a long time. The current trend of global procurement in the automotive industry is systematization and modularization. For example, cars no longer purchase single locks, electric glass window shakers, and anti-theft products. Instead, they replace the entire door module system; tachographs are no longer purchased separately. Instead of a single part such as a CD player and a control switch, the entire dashboard module is purchased. In this way, those suppliers who do not have the modular supply capability and only provide individual parts and components must take the road to complement each other, through the integration of industry, strong alliances, and alliances with auto systems companies, as a secondary supplier of modular suppliers. The three-tier suppliers have formed a community of interests before they can be eliminated from the market in the new round of structural adjustment of the auto parts industry.