Transmission Parts Makers in China Shifting to High Gear to Boost Competitiveness

By JENNY WU

Statistics compiled by the China Association of Automobile Manufacturers (CAAM) show that in 2013, automobile production and sales in China were 22.12 million and 21.98 million units, respectively, up 10.2% and 9.6% from the previous year.

China's annual new-car sales, CAAM forecasts, are expected to increase another 8% to 10% to about 24 million units in 2014, to make the nation remain the world's largest automobile market for the sixth consecutive year.

Exports & Imports

Driven by vigorous development of the automotive industry in China, demand for automotive drive shafts has been rapidly increasing, with expanding production capacity of such products also boosting auto-parts makers' export. Customs data compiled by CAAM shows that in December 2013, export value of transmission system parts by Chinese suppliers was US$332 million, up 20.8% year on year, with cumulative value in 2013 of US$3.65 billion, a 28.3% increase. Last year, the major  markets for China's transmission parts exports were the U.S., Japan, South Korea, Malaysia, Thailand etc.

Industry sources point out that the automotive drive shaft sector in China has been developing rapidly. However,  price hikes of key materials and the fierce underselling competition between parts suppliers have led to major changes in the sector: big and major drive shaft makers have been striving to upgrade ability in material-price bargaining by expanding production scale and elevating production efficiency; while they are also focusing on innovations in key materials and new techniques to cut mass production costs. Basically, the sources note, prices of China-made automotive drive shafts are stable now, but are forecast to soar if suppliers fail to absorb material-price hikes.

Though China has a sizable market for automobile drive shaft products, production scale and product development capability of domestic makers still lag international major players. Generally, Chinese automobile drive shaft suppliers are lower-end players who rely on low labor and resource costs. However Chinese suppliers stand a chance, if they develop independent technical and innovative capabilities, to grow significantly given the rising outsourcing trend globally; while smaller and technically-insufficient enterprises producing low-end items are forecast to be sidelined gradually due to hiking labor cost in China.

GSP AutomotiveThere are some good-quality suppliers of automotive drive shaft products in China who endeavor to upgrade international competitiveness. A good example is GSP Automotive Group, a major  automotive transmission parts manufacturer for both global Original Equipment (OE) and aftermarket (AM) customers. According to statistics compiled by CAAM, the group has been the No. 1 producer in  production volume in China for seven consecutive years as of the end of 2013.

The group was established in 1985 and has grown into a major player of its kind, supplying mainly constant velocity (CV) joints, drive shafts and wheel-hub assemblies, boasting offering about 95% of passenger-car applications in the world, or more than 4,000 parts for almost all major American, Japanese, European, Korean and Chinese makes and models.

Equipped with advanced lean-production management system, sophisticated equipment, 30 years of manufacturing experience, more than 2,000 skillful workers etc., GSP claims to have yearly production capacity of 7.5 million CV Joints, 3.6 million drive shafts and 2.4 million hub assemblies. The group's large production base in Wenzhou, Zhejiang Province of China, has become a national-level auto-parts production and export base supplying more than 120 countries and regions.

GSP is certified by all major quality systems required by the automotive industry, including ISO/TS16949, ISO14001, OHSAS18001, ISO 10012 etc.

GSP is a major OE and OES (OE service) parts supplier to many international assembled-vehicle makers and tier-1 parts suppliers, including Chrysler, ChangAn, JMC, XiaoLong, Toyota, Chongqing Huansong, Ninbo Lkcy, Shandong Liangzi Power, Zhengjiang Shengqi Group, Chongqing Loncin, Bauch, and many others. In 2013, the firm's sales revenue totaled more than 800 million renminbi (RMB, or Chinese yuan), with its own GSP brand  registered in more than 100 nations and regions.

With four major overseas subsidiaries, including GSP Europe GmbH for Europe, GSP North America and GSP West LLC for North America, and GSP Automotive Inc. for Latin America; three distribution centers in Hamburg Germany, California and South Carolina of the U.S.; and three data suppliers, including TECDOC in Europe and Activant, Wrenchead in America, GSP claims to have a well-structured international sales network, as well as well-known brand image around the world.

Shou Chi Industrial

Founded in 1975, Shou Chi Industrial Co., Ltd. is a specialized manufacturer of high-quality front-wheel drive shafts and related products for popular makes and models from around the world, especially Japanese and Korean makes.

The firm offers drive shafts, half-shafts, outer joints, clamps, tripods, center shafts, cages, ABS rings, constant velocity (CV) joint boots, screw nuts, grease, chrome balls, and related processing, tooling, testing, and inspection services.

The firm has marketed durable, high-quality products globally under own "GCK" brand for over 30 years, also selling products on the OE basis to vehicle makers globally.

The manufacturer's modern, integrated plants are TUV SUD ISO-9001 and TS-16949 certified.

Thanks to outstanding quality and high precision of its products, Shou Chi passed the most stringent certification processes to become a qualified OE supplier to carmakers beginning in 1993. With years of experience in half-shaft development and production, the company has grown into a trustworthy supplier to many carmakers in Taiwan, North America, and China.

Shou Chi is proud of its state-of-the-art production facilities and sophisticated quality-control (QC) systems and equipment. In the pursuit of the best possible quality, the company continuously exchanges data with advanced national-level testing labs for auto parts-related verification and production.

The company's current range of products covers more than 4,000 applications, and to better serve global customers it maintains a high inventory level for the most popular items. This can greatly shorten delivery times and provide true one-stop shopping services.

Shou Chi's products are welcomed by customers in over 70 countries, and the firm wants to expand customer base even further by supplying hard-to-find items and providing rapid-response services.

Zhejiang ODM

Zhejiang ODM Auto Parts Ind. Co., Ltd., established in 2005, specializes in manufacturing CV joints and drive shafts for popular American, Japanese, Korean, and Chinese passenger cars, trucks, buses and all terrain vehicles (ATVs).

The company is ISO/TS 16949-, ISO 14001-, ISO 9001-, VDA 6.1- and QS 9000-certified, implying its strong commitment to high quality and efficiency.

The company claims that it has accumulated experience and know-how as well as modern and superior management systems for more than 20 years from its parent group, making it one of the most competitive makers in the line.

The CV joint and drive-shaft supplier is also a frequent winner of many prizes for its superior products and management, including the very important confirmation "National Automobile Parts Export Base Enterprise" granted by the Chinese Ministry of Commerce and National Development and Reform Commission.

ODM operates six self-owned and joint-venture production plants, employing over 1,500 people, including more than 200 high-level engineering and technical staff. The annual production capacity of ODM has been rising and now reaches around six million CV joints and three million drive shafts.

The firm has been aggressively developing more new product items to be a real one-stop-shop of CV joints and drive shaft for the most popular makes and models. Currently, ODM supplies over 3,000 CV joint and 2,000 drive-shaft models.

Besides a major supplier in the global automotive aftermarket, ODM has also successfully entered the OE parts business by supplying quality and reliable parts to many automakers, including Chery, Changhe, SGMW, Jiangling, Kia, and many others. The firm's products are widely welcome by customers in more than 80 nations and regions in America, Australia, Southeast Asia and the Middle East.

Taizhou Heri

Established in 1986, Taizhou Heri Auto Parts Co., Ltd. specializes in developing and manufacturing CV joints and drive shaft assemblies for automobiles. The company is a subsidiary of Zhejiang Heri Rock Arm Co., Ltd., and an affiliate of Shanghai Heri Auto Parts Co., Ltd.

Currently, the company operates 12 brand-new computer numerically controlled (CNC) production lines, cutting-edge and perfect detection technologies and model experimenting equipment, with an annual production capacity of up to 1.2 million drive-shaft assemblies and 2.5 million CV joints, while its annual sales revenue is about 200 million RMB.

The company's own HERI brand CV joints and drive shafts assemblies have been exported to countries and regions such as Southeast Asia, Europe and America, winning the highest confirmations for quality and reliability from global clients. The firm has adhered to management philosophy of "customer first, technical renovation, pursuing harmony, and common development," which has helped to secure stable and fast sales growth.

With goals of becoming a major production base of CV joints and drive-shaft assemblies in China, as well as the major growth driver for its parent group, Heri plans to pour about 50 million RMB over next two years to install top-end equipment and introduce the latest production techniques.

Corporate culture is the core spirit of an enterprise, Heri claims. The firm has been trying to differentiate its corporate culture from that of its counterparts to build strength. At Heri, the combination of value objectives of employees and more effective acceptance of common objectives by employees etc. form integral part of the firm's unique corporate culture.

Taizhou Encortich

Taizhou Encortich Transmission Shaft Co., Ltd. was founded in 1998, specializing in developing and manufacturing various kinds of CV joints and drive-shaft assemblies for automotive applications. The maker was certified by the ISO 9002 international quality system in 2000, the ISO/TS 16949 in 2009.

To meet increasingly strong global demand, Encoritch began constructing a factory in Yuhuan, Taizhou of Zhejiang Province, which kicked off mass production in mid-2008.

With steady and intensive investment in product development, Encortich currently supplies more than 2,000 product models for almost all major American, Japanese, Chinese, European and Korean makes. After long-term investments in R&D and manufacturing equipment, the maker now owns advanced precision production and processing lines with total annual capacity of 2.5 million CV joints and 600,000 drive-shaft assemblies.