With exquisite timeliness — see yesterday's EngagingChina story on automotive suppliers — Wanxiang, China's largest car-parts maker is talking to Ford about buying some of its troubled component businesses, according to the Financial Times ($).
The assets under discussion involve Automotive Components Holdings,
a group of 17 plants and six other facilities that Ford took control of
last year as part of the bail-out of Visteon, its former captive
components business that was spun off as an independent company in
2000. Ford plans to sell or close all ACH facilities.
While the jury is still out on whether China's carmakers are ready
to take on the world market, its component suppliers are already making
increasingly aggressive moves abroad.
A large part of their success — and the reason for the decline of
traditional western parts makers — is due to low labour costs, but
Chinese suppliers like Wanxiang know that they cannot hope to build
long-term strategic relationships with western carmakers by competing
purely on price.
Chinese suppliers are thus working hard to shake off the
cheap-and-cheerful image by boosting quality and investing in R&D
facilities in the west — see yesterday's story.
Ultimately, they would like to to join the top table of Tier One
suppliers, traditionally dominated by western and Japanese names, and
by acquiring facilities from distressed Tier One suppliers like
Visteon, they hope to get to that goal more quickly.
Wanxiang has also had discussions with Delphi, the former General Motors parts-maker that is in bankruptcy proceedings.
Wanxiang was founded as a bicycle repair shop by Lu Guanqiu and has
grown to be one of China's largest enterprises with sales of $4.2bn and
more than 40,000 workers. In the US, it recently opened a brand-new
facility in Elgin, Ilinois (see photo).
More on Wanxiang on its website.
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