Ningbo Auto-parts Industry Soars on Strong Auto Demand

At the end of 2008 the city of Ningbo, in Zhejiang Province, had 624 auto-parts companies with 89,112 employees. Compared with a year earlier, these figures represented increases of 73 and 11,069, respectively.

Ningbo's auto-parts industry generated revenues of 30.71 billion renminbi (RMB) in 2008, for an increase of 28.3%; exports were 7.21 billion RMB, up 12%. The industry's profit grew 25.4% from the previous year, to 2.31 billion RMB.

In 2009, however, the city suffered from the impact of the global financial turmoil, especially in the first six months. This resulted in a minor decline in growth rate.

The city's main auto-parts categories include automotive engines and parts (mainly complete engines, oil pumps, water pumps, camshafts, cooling-fan clutches, radiators, transmission clutches, fuel pumps, and transmission gearboxes); chassis systems and parts (front and rear axles, wheel hubs, ball joints, steering columns, shock absorbers, suspension arms, steering wheels, brake discs, etc.); body parts and accessories (interior and exterior decorative items, instrument panels, door frames and panels, window-glass guides, grills, wheel covers, engine hoods, door handles, etc.); and electrical, instrument, and related parts (combination switches, power-window switches, center-console switches, alternators, starter motors, auto lamps, high-strength fasteners, etc.).

Many of Ningbo's manufacturers of these products are tops in the field in China. Statistics show that 76% of them sell their products either to automakers or to first- or second-tier parts suppliers there. Less than 20% sell to the aftermarket. Exports, which account for about 25% of production, go mainly to markets in the United States, Japan, and Europe; sales to the Middle East, Russia, India, Southeast Asia, and South Korea, however, are also expanding.

To assure survival in the ever-changing market, some of the manufacturers have been working to adjust their product structures and upgrade their technology. They have also been developing more new and advanced products, such as oil pumps for automatic transmissions and sensors for air-bag systems. Such products give their producers access to higher-level markets and customers in China and around the world.

Ninbo's non-metal auto parts are its most competitive, while the production of metal and auto-electronics parts is still in the initial stage of development. Industry insiders urge the more vigorous development of technology-intensive products such as engines, anti-lock brake systems, intelligent control systems, and automatic transmissions.

The city's auto-parts makers suffer from a relatively small scale of operations. Of the state-run parts makers there, 81% report annual revenues of less than 100 million RMB and 17% take in between 100 million to 500 million RMB. Of the private auto-parts makers in the city, 89% have annual revenues under 100 million RMB. The average production value of all the city's parts companies is less than 50 million RMB.

Fewer than half of the companies have any patented products, but some of the foreign-invested firms boast relatively strong R&D capability and own technology for key parts. These companies account for a high portion of the original equipment (OE) parts manufactured in the city.

Despite the problems they face, auto-parts makers in Ninbo are confident that the rapidly growing demand for automobiles in the Chinese market guarantees them a bright future.