Foreign brake pads companies are eager to build factories in China are currently sold back abroad

In recent years, due to the favorable economic environment and low labor costs in China, foreign brake pads companies have gradually shifted their production capacity to China. The reporter learned that at present, foreign famous brake film companies have already invested in factories in China. The products of these foreign brake pads are mainly sold back to foreign countries. Although the cost of management is slightly higher than that of Chinese companies, most foreign-funded enterprises have achieved good results, relying on advanced management and technology levels, combined with China's low labor cost advantage. This has the potential for stimulating the development of the domestic brake pad industry. Well-known foreign companies have product, brand, and capital advantages, which is a challenge for domestic independent brand enterprises.

In the interview, the reporter learned that, in recent years, foreign brake pads companies have entered China mainly through joint ventures or wholly-owned construction, matching, and mergers and acquisitions.

Joint ventures and wholly-owned construction are the basic forms of foreign brands' entry. At present, the world's major manufacturers of brake pads such as Akebono in Japan, Ferodo in the United Kingdom, TMD in Germany, Honeywell in the United States, and Frasle in Brazil have all set up factories in China. Wang Yao, chairman of the China Friction Sealing Materials Association, told reporters that TMD, which is a subsidiary of almost all well-known brands in Europe, has two wholly-owned factories in Shijiazhuang and Hangzhou with an annual output value of 200 million yuan. The establishment of these joint ventures and wholly-owned enterprises further exacerbated the technological competition and cost competition of the global brake pad industry.

In the process of “landing” by foreign OEMs in China, some foreign companies that have brake pads also settled in China with certain incidental provisions. For example, the two Korean-owned brake pads factories in Shunyi, Beijing, entered China along with South Korean automakers. This kind of "original matching" enterprise has no obvious advantage compared with China's own brand brake pad manufacturing enterprises. According to industry insiders, at present, except for a small number of vehicles such as Mercedes-Benz and BMW, which require special equipment, the self-branded brake pads have been able to meet the needs of all models.

M&A is another important means for foreign brake pads companies to enter China. American Morse has a factory and warehousing sales system in Chicago. A few years ago, Morse's shareholders decided to enter China when the US factory's production capacity could not meet market demand. Through the acquisition of a Shanghai brake company, Morse took advantage of China's low labor, electricity, and land to successfully reduce costs. All products were sold back abroad and they made huge profits. The production capacity has been expanded from the initial design of 2 million units to 6 million units. According to reports, Morse continues to reduce its production capacity in the United States and increase investment in China.

For the foreign-funded enterprises, step by step, Sun Zhongyi, chairman of Shandong Jin Qilin Group, believes that if Chinese companies do not accelerate development and develop new products, they will be eliminated by these multinational companies in their own land.

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