Two global automotive-parts buyers were recently invited by the Taiwan External Trade Development Council (TAITRA) to come to the island to find qualified suppliers of high-quality, reasonably-priced products to complement their global supply chain.

The two key procurers, Ricardo Ambrosini, purchasing supervisor of Delphi South America`s aftermarket operations (Delphi Aftermarket S.A., based in Brazil) and Stefan Onken, project manager of Johannes J. Matthies GmbH, Germany, kindly gave interviews to the China Economic News Service (CENS), revealing tips to help local companies find more effective ways to develop international sales.

Both senior purchasers gave their thumbs up to Taiwan suppliers` ability to make and supply high-quality, competitively-priced auto parts, but also suggested local companies to offer more comprehensive corporate and product information-making them easily accessible by international procurers.



Delphi Aftermarket S.A. Has Taiwan Suppliers on Its Mind
Delphi Aftermarket S.A. is a subsidiary of U.S.-based Delphi Corp., a leading global supplier of automotive electronics and transportation systems such as powertrain, safety, steering, thermal, and controls and security systems, electrical/electronic architecture, and in-car entertainment technologies. As the average age of automobiles in South America is over nine years, the aftermarket auto-parts business in the region has drawn increasing attention of major global players, with such market worldwide generating annual sales of about US$3.5 billion.

The booming South America market also drives Delphi Aftermarket S.A. to regularly seek more qualified suppliers for its supply base so as to offer more comprehensive product lines in the shortest period, a key tactic especially when many big international players are also eyeing this huge and potential market.

Delphi Aftermarket S.A.`s operation has been steadily expanding at an impressive pace. In 2005, the company registered revenues of US$777.6 million, up around 20% from the previous year, and this year the company`s sales in Brazil and Argentina alone are expected to grow to about US$1 billion.

In 2007, Ambrosini said, Delphi Aftermarket S.A.`s annual procurement value is expected to grow around US$5 million, and the young purchasing supervisor stressed that his company is a fully financially-independent subsidiary of Delphi North America, whose share prices have been rocky in recent years.

Since mid-2005, Delphi Aftermarket S.A. has relayed seven inquires for 29 products to TAITRA, which has set up a B2B portal website for the big procurer and recommended over 70 qualified suppliers in Taiwan to the buyer. Delphi Aftermarket S.A. has sourced several products from Taiwan suppliers, including in-car multimedia entertainment systems (DVD players), headphones (for in-car multimedia entertainment systems), automotive air-conditioner condensers and radiators, and motorcycle batteries.

This time, Ambrosini wants to find a group of suppliers of high-quality GPS navigation systems, car radios, car DVD players, radiators and condensers, oxygen sensors, temperature sensors and switches, and electric fuel pumps. In addition, the purchasing supervisor is also quite interested in Taiwan-made high-quality Bluetooth and infrared wireless products, such as hands-free accessories and headphones.

According to Ambrosini, the well-financed group in Brazil and Argentina is growing, with a similar growth in purchase willingness for automotive electronic equipment-creating big business opportunities for automotive-electronics suppliers in the region and potential shifts in procurement focus for Delphi Aftermarket S.A. The purchasing supervisor praises Taiwan`s innovative, high-quality, and significant range of consumer electronics, which also has good potential to be modified for automotive applications. Taiwan has become one of the most powerful supply bases to help Delphi Aftermarket S.A. to transform into an even bigger presence in the booming market.



Though Delphi S.A. has set up over 10 manufacturing plants in South America to produce aftermarket parts, Ambrosini says, his company still wants to outsource items that call for high degrees of technicality and intensive investments. He feels that currently products made in China are cost competitive but lackluster in terms of quality control and technical sophistication-still falling short of Delphi S.A.`s demand for comprehensive and quality product lines.

Nancy Hsu, specialist of the e-sourcing section at TAITRA`s Trade Net Center, points out that more and more big foreign procurers are looking closer at Taiwan`s automotive-electronic suppliers, strongly supported by the island`s global-leading information technology (IT) and electronics industries, and are trying to recruit qualified Taiwan suppliers into their supply chain. To make the most of the trend, Hsu adds, TAITRA will work harder to enhance the interactions between local suppliers and foreign buyers in the automotive electronics-related fields.

Matthies
Established in 1935, Johannes J. Matthies is one of the most important auto- and motorcycle-parts distributors in Germany, whose annual revenues total about 150 million euros, with a procurement value of around 80 million euros.

Currently, the company runs 14 chainstores in Germany to supply mainly aftermarket auto and motorcycle parts as well as repair and maintenance tools. In northern Germany, the company is a leading aftermarket auto-parts distributor with its own truck fleet to deliver products to customers within four hours; while nationwide, Matthies now has about a 35% share of the motorcycle-parts market-able to deliver products to customers anywhere in Germany within 24 hours.

Onken has been in Taiwan four times, while Matthies has sourced products from Taiwan for about 20 years, especially motorcycle parts, auto repair tools, automotive air-conditioner parts and others. This time, Onken wants to find more qualified suppliers of auto lamps, air conditioner parts, regulators, lane departure warning system (LDWS), starter motors, rubber tires, and batteries.



Onken
"My major purpose to visit Taiwan for the fourth time is to help Matthies extend its product range procured in Asia," points out Onken. "In addition, my company wants to keep supplier number as low as possible and therefore prefers to work with trading companies or comprehensive suppliers who are big enough. Taiwan is a good supply base for Matthies in Asia, among other nations we procure from, such as Japan and Vietnam."

The advantages of Taiwan lies in not only in the good-quality, reasonably-priced products supplied by companies on the island, Onken points out, but also that Matthies considers Taiwan to be a point of access to qualified suppliers in China, which is another potential supplier base for Matthies, a mid-sized company that does not want to invest heavily in time and labor needed to find qualified suppliers among the sea of companies in the huge nation.

"For Matthies, Taiwan auto- and motorcycle-parts suppliers have many advantages," Onken explains. "The first is the relatively short proximity between a large number of quality suppliers-making the sourcing trip much easier, more cost effective and feasible over a few days. Second, I think, Taiwan companies may be the most trustworthy partners anywhere who can help Matthies develop business safely and stably. Third, most Taiwan trading companies have staff who are English-capable, an important skill for intensive business negotiations."

Compared to small and medium firms in China, those in Taiwan offer good-quality products and cost competitiveness, Onken says. "We are still skeptical about the overall quality consistency offered by China suppliers," the project manager says, "but such problem is apparently much smaller in Taiwan. So, Matthies` favorite suppliers are, of course, companies headquartered in Taiwan who offer high-quality products made at their plants in China."

In addition to quality and cost advantages held by Taiwan auto-parts suppliers, Onken strongly advises local companies to work on "better services"-especially offering comprehensive corporate and product information to foreign buyers. That means, he explains, a company should provide detailed information on its products and clarify its target market to make international procurers` sourcing trip more efficient. "I also suggest Taiwan companies aggressively explore global markets with more effective information presentation, a good approach to build sales."

"In addition, I think Taiwan companies should do more to meet customers` requirements and offer relevant product information," Onken goes on. "Only through product-information presentation and communication with potential buyers can a company learn how to improve to compete against rivals."

Better information or presentation, according to Onken, includes clear product catalogs, inventory volume, shipping terms, lead time, and other services and capabilities.

Matthies wants to source more auto tools, scooter parts, and auto parts from Taiwan, Onken says. The German company`s annual procurement value from the island is expected to double in the next three years to about one million euros, the project manager says.

Ambrosini
Feeling similarly optimistic toward qualified Taiwan suppliers, Ambrosini also wants to procure more items from Taiwan that are competitively priced and good quality-with particular importance placed on holding up Delphi`s famous brand image.

Ambrosini says that his company recognizes tacitly that Taiwan auto-parts suppliers are internationally famous with wide ranges of aftermarket parts for Japanese cars and such companies are without a doubt the best partners for Delphi Aftermarket S.A. to build business expeditiously.

The purchasing supervisor suggests Taiwan suppliers strengthen their English skills. He admits that many sales representatives speak English adequately but falter when the talk becomes technical. "The auto-parts business is very safety-sensitive, he says, so we have to be very careful about every detail," he says.

The second suggestion, may be related to the first, is that Ambrosini strongly suggests Taiwan auto-parts suppliers to regularly update their websites-offering useful information to big foreign buyers like Delphi S.A.-making their sourcing trips as efficient as possible.

"There are always hurdles in communication between buyers and suppliers due to the global time zones," he points out, "and the best way for both parties is a well-structured website allowing for detailed information exchanges that go beyond the limitations of emails."

Another suggestion, one that is virtually contradictory, to Taiwan suppliers is for them to try everything within their power to match the prices of their counterparts in China. And, with a degree of sympathy, Ambrosini reminds Taiwan companies to be wary of the development of rivals in China. "Some Chinese suppliers, especially the big tier-one or parts-production arms of automakers there, already turn out quality items at competitive prices, and we are witnessing the natural decline in the number of low-end suppliers through market mechanisms."

Finally but equally important, Ambrosini says, is for Taiwan suppliers to persist in quality upgrading, cost analysis, and all-round improvement so as to retain their international competitiveness.

Delphi Aftermarket S.A. plans to increase its annual procurement value by about US$5 million, Ambrosini says, so Taiwan suppliers may expect to see more orders coming their way-but exactly how much more will depend on their effort and performance.


(by Quincy)