car plant.jpgDuring the first quarter of 2007, China narrowly surpassed Germany to become the second largest exporter of car parts to the all-important US market, according to official figures from China's ministry of commerce (Mofcom).

The achievement is clearly a wake-up call to Germany's automotive supply sector, which had traditionally prided itself on its engineering skills but has been caught offguard by the rapid rise of low-cost Chinese competition.

China's component suppliers are 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 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 this EngagingChina story for more.

According to the Mofcom figures, Japan continues to be leading supplier of car parts to the US automotive industry, with export volume of almost $3.6bn, but China is not far behind, exporting parts with a value of $1.936bn in the quarter, just a nose ahead of Germany's $1.934bn.

Given the slender margin and volatile nature of quarterly figures, it's probably too early for China to call victory over Germany. In the year-earlier quarter, Germany was well ahead with exports to the US worth $1.73bn compared to China's $1.52bn.

Nevertheless, China is definitely emerging as a major force in the automotive supply industry and its exports to all countries soared 32% year-on-year in the quarter to reach $6.1bn.


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