“Our main business is to look for qualified suppliers in China that are locally produced and committed to expanding our business to the world; to upgrade local subcontractors to become a tier one supplier for Renault; to execute specific procurement projects, etc. In short, Renault The Purchasing Department has already regarded China as a major supplier of auto parts."
Before the interview with Duning, I read again the recent sensational book “China changed the world†written by the famous French journalist Eric Izralevich.
Eric wrote in the book, "Automobile is the only way to the modern market economy." Eric, who had been interviewed in China for 30 years, witnessed the changes in China. He said in the book that for the world’s big car manufacturers, such as GM, Toyota, Renault-Nissan, etc., “China has entered The most important event in the era of automotive civilization since the invention of the car was unconscious. "I think that Dunin, who is also a Frenchman, and an expert who has worked in the automotive industry for a long time, will not feel this way. In particular, the success of Nissan as a league enterprise in China may experience deeper.
In May of this year, Renault Co., Ltd. Shanghai Representative Office was established in Shanghai. Dunin served as chief representative. At the beginning of his term of office, he first issued an invitation to the newspaper to interview him. We think that this may be related to Carlos’ China strategy. Eric said in his book, “In the past quarter century, the world has changed China. Today, China is changing the world.â€
This is a historical trend. The same is true of cars. The world car has left China. Can it be so wonderful now? "It is not China's defeat to save the world." This is almost the consensus of the world's auto giants is an indisputable fact.
Therefore, Renault came to not only produce vehicles but also to purchase zero cases in China. According to Dunin's introduction, Renault has started to throw out plans to purchase large parts in China.
Reasons to choose Shanghai
Shanghai is not unfamiliar to the French. There are not only many French buildings but many French cultural relics. In the Sino-French Cultural Year this year, apart from cultural exchanges that have become a major event between China and France, the French investment in Shanghai has also entered a harvest season. In this context, Renault's presence in Shanghai seems to be a matter of course. Duning said that Renault's representative office in Shanghai is actually doing the work of spare parts. He said that Renault has a procurement plan for parts and components worth 20 billion euros each year. Previous overseas targets were mainly Japan, Mexico, Canada and other countries. Now they are paying attention to China. The reason is simple. A large number of the world's auto parts giants have come to China to set up joint ventures. From the current quality of finished cars produced in China, it can be seen that the level of parts and components is not low, and some are also exported. In particular, Shanghai has concentrated on China's most outstanding parts suppliers and is a de facto production base for China's parts and components.
There is nothing wrong with Dunin's analysis. The essence of China's spare parts is concentrated in Shanghai. This is inseparable from Shanghai's strict compliance with the requirements of the "automotive industry policy" for the introduction, digestion, and absorption of localization. In fact, the world's auto giants set up a procurement center in Shanghai is not a Renault family. The previous GM, Toyota, and other auto companies had started in Shanghai several years ago.
“If Marco Polo came to Shanghai on a regular basis in recent years, he would be surprised by the changes in the city. It is no exaggeration to say that this change is the best portrayal of the entire Chinese economy that is undergoing degeneration.â€
This is the reality that everyone who cares about China feels.
Duning said that Shanghai and Paris are not far away. The changes here can be felt in Paris. In Shanghai, we can see the changes in the entire Chinese automotive industry. This is not too late for us, and it is catching up with the development opportunities of the automotive industry in China.
Establishing channels is the key
"Now China's auto production capacity has exceeded 5 million, of which the car's production capacity is 3 million." Duning said that in fact this is a conservative figure.
According to official statistics, China’s market value of parts and components will reach 160 billion yuan (including aftermarket) in the coming years. With the popularity of automobiles, people have realized that auto parts are in the entire automotive industry chain. The role and status of China are increasing year by year. This is a fact that is difficult to separate from the progress of auto parts. Du Ning said that the key to our procurement in China is not to simply purchase, but to establish procurement channels and establish networks. This is an extremely arduous task.
According to Duning, Renault's procurement standards in China are international standards. From the raw materials, processes, quality, scale and other strict requirements. He said that the quality of parts purchased in China is the same as in Europe. In China, we not only announce our plans for procurement, but also conduct inspections. Strict screening has certain requirements and conditions.
From a professional point of view, to become a supplier of Renault or to undergo a lot of evaluation procedures, it is a low threshold for domestic parts and components companies. For low value-added products and difficult to transport products, it is not the focus of procurement. According to Duning, what we want is valuable parts and components.
Here, Duning emphasized that we are not simply trying to reduce procurement costs. The first is a good product, followed by the establishment of channels and then the scale. In a strict sense, China's auto parts do not have an advantage. The reason is that the cost is not low. Most of them are produced with foreign machinery and equipment. Raw materials and labor are not cheap, but we value the Chinese zero. Parts are going to scale and there will be good prospects. From now on, we must realize this.
Integration of China's auto industry
“It is expected that China’s exports of parts and components will reach 10 billion U.S. dollars in 2006, while Japan, Mexico, Canada and other countries will export parts between 3 million and 3.5 million U.S. dollars each.â€
From the information provided by Duning, the future of China's auto parts exports will be an important market that is even better than the entire vehicle export. Du Ning, who has worked at Renault for almost 30 years, is very aware that China will be one of the newly emerging countries in the world of automotive components. He said that last year, China’s car production exceeded 200 million, and this year it will rise. By 2010, it is not difficult to break 8 million cars. It can be seen that parts and components that are the basis of the automotive industry are definitely a priority industry. He said that the selection of China's excellent suppliers as Renault's partners means that the realization of needs is also a strategic choice. For Chinese parts and components companies, this is also an opportunity to use Renault's procurement platform to enter the international market.
We can see that Renault’s annual production is 2.5 million vehicles, with 6,505 suppliers, including 577 auto parts suppliers.
“What will it mean for Renault to stand on such a platform to select China's auto parts suppliers?â€
For our questions, Duning said, "This is based on the growth of China's spare parts and the development of this region. We have to pay attention. Integrating Chinese cars is just like how the Chinese economy is in the world. This is a trend."
He admitted that I am not clear about the company's big decision, but I understand that China's parts and components have potential, especially those companies with a foreign investment background are internationally known suppliers of some famous auto companies. Our main business is to look for qualified suppliers in China that are domestically produced and committed to expanding our business to the world; to upgrade our local subcontractors to become a tier one supplier for Renault; to implement specific procurement projects. In short, Renault Purchasing has already regarded China as a major supplier of auto parts.
"The competition in China will determine the leader in the world auto industry in the next few years."
This is the prediction of General Manager Wagner.
Judging from the characteristics of the internationalization of the domestic market in recent years, this trend has surfaced. Similarly, Carlos, who succeeded in turning Nissan back into profit, became another Shimanto hero following Ikeka. In his Nissan recovery plan, the best thing to say is that "products are the first," and second is to get the nickname "cost killer." It is not difficult for us to see that Renault's presence also began to take off in China as well as Nissan. However, it is worth noting that when Renault tossed out orders for procurement, will our parts and components companies have the ability to catch up to this ship?
From the perspective of the inspection, Dunin is confident.
View related topics: Dongfeng Renault project tracking report
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