Supplying Auto Parts To The World

In this write-up, the founder of China’s third-largest private company, Lu Guanqiu, discourses the future of China’s automotive industry. Of late, he has been getting auto parts manufacturers in Europe and the United States to ameliorate his company's technology and access to markets. Wanxiang Group Corporation, which started out as a repair shop for bicycles and farm tractors is already one of the top 500 companies in China and an ISO 9002 Certified Manufacturer too. In 2003, the earnings for the company stands at $165 million on $1.8 billion of sales (including $380 million worth of exported parts or manuafactured abroad).

A worldwide surfeit of production capacity, however, is coercing carmakers to exert heavy pressure on suppliers to reduce the costs. Although Wanxiang has a labor cost edge over its Western rivals, auto parts vendors in the West have advantages such as larger scale and advanced technology. In the interview, Lu Guanqiu shares with all how Wanxiang thrived and discusses his plans for the future, including his dream of producing a Chinese brand of electric cars.

Source:
http://www.mckinseyquarterly.com/article_page.aspx?ar=1489&L2=2