Survivors Thrive Following 2006 Fuel-pump Industry Shakeout

The Chinese fuel-pump industry has been developing rapidly in recent years, in tandem with the auto and auto-parts market there, and is now dominated by four big multinationals: German's Bosch and Siemens, Japan's Denso, and America's Delphi. These foreign firms have done much to upgrade China's gasoline-engine electronic injection technology.

Domestic fuel-pump makers continue to focus on the aftermarket, and after years of struggle they are making inroads in overseas areas. The largest production base for fuel pumps is Wenzhou, in Zhejiang Province; with an annual output of 10 million units, it accounts for over 60% of China's total output.

The fuel-pump industry in Wenzhou has experienced roller-coaster development, with the number of manufacturers there shooting up to over 200 after the boom began in 1999. Then the industry fell into chaos and collapsed because of acute price competition among essentially identical products, most of which incorporated low-level technology.

Wenzhou's fuel-pump industry has been constrained by its weak technological base, and even manufacturers that specialize in these products have limited output. As a result, R&D spending is grossly insufficient and technology remains stagnant.

The industry emerged in more healthy condition, however, from a shakeout caused by a market downturn in 2006. The 80 surviving producers have become intensely aware of the importance of technology, brand, and economies of scale, and have invested large amounts in technology and manpower as well as the expansion of production capacity. Most of the suppliers now turn out more than 100,000 units a month each, and many have established their own brands.

Following are profiles of two major Wenzhou fuel-pump makers:

ACHR Electric Machinery Co.

Founded in 1994 and now having a registered capitalization of US$6.5 million, ACHR Electric Machinery employs over 500 people in a 25,000-square-meter factory. The company focuses on electronic-injection fuel pumps, producing 550 models in six different series designed for use with over 2,000 car models, and exporting 90% of them to North America, Latin America, and Western Europe. Revenues reached US$50 million in 2008.

Zhejiang Jinjia Auto Parts Co.

Founded in 1989, currently with US$2 million in registered capital, Zhejiang Jinjia turns out over 2.1 million fuel pumps a year. Its 358 workers produce more than 700 pump models for a wide variety of domestic and foreign car brands.

Zhejiang Sensen Auto Parts Co., Ltd.

Founded in 1985, Zhejiang Sensen owns five production bases located in Zhejiang Province, Shanghai, and Jiangsu Province, which turn out, among other auto-parts, 2.6 million electronic-injection fuel pumps in over 200 specifications a year, suited for use in U.S., Japanese, European, Korean, and Chinese car makes.