Delphi: Helping Chinese Domestic Auto Manufacturers Build Their Own Brands

——Majdi Abulaban, President of Delphi Automotive Systems (China) Investment Co., Ltd. in China at the Third China International Auto Parts Development Summit Forum

Ladies and Gentlemen, I am very happy to come to Beijing. I come to Beijing every year to see how quickly Beijing has developed. In fact, I lived in Beijing in 1993. So I know how much Beijing has changed. As Frank said, thank you for your speech that points out the good weather we have.

In fact, our company entered China in 1993. We have been committed to the development of local talents to serve the local automotive industry. Before I continue to talk about the current state of the industry today, first of all, I would like to briefly talk about Delphi's automotive system.

We are the global leader in the entire drive system of automotive components. We have been committed to providing technical support to customers around the world. Our turnover has reached 80 million. Our products are sold in China, and we have 18,000 employees and 22 companies in China. At the factory, customers can enjoy our 41 products.

Second and third tier markets will play a greater role in driving Chinese cars

In the past few years we have seen the rapid development of the automotive industry. It can be said that the automotive industry has begun to mature, and Chinese manufacturers are now facing good opportunities to push the automotive industry to a higher level. I want to talk to you from the perspective of the relationship between suppliers and manufacturers.

Looking back at this information, it may be clear to everyone that over the past decade, the automotive industry has made very rapid progress. The picture above is the "Biking Kingdom", and now the "Bicycle Kingdom" has become the "Car Kingdom." "It has become a very large car market in the world. You can see the topic of my speech "From victory to glory." Now that our industry is a victory, we will take more steps to achieve greater glory.

At the beginning of this year, China's auto market achieved a landmark event - the production and sales of automobiles surpassed the United States. This is a very remarkable achievement. Frankly speaking, we all think that it will take longer for China to achieve this goal. Looking at the matter itself, not only the number of cars, but also more engines and brands. At present, there are 90 models on the Shanghai Auto Show, which is very impressive. Compared with other places, Shanghai Auto Show has tens of thousands of exhibitors. The masses, more than 100 automobile manufacturers participated.

Chinese parts manufacturers are still expanding their share in the local market. In 2009, China's parts manufacturers accounted for about 30% of the market share. If we only look at the numbers, we can't explain the problem. If we look at it, The maturity of these products can clearly explain the problem, and they are increasingly close to the world's leading products. In terms of safety, hybrid vehicles and emissions, China has approved more stringent Euro III, Euro IV and Euro 5 emission standards. Explain that the Chinese government attaches great importance to these issues and has also formulated a 5% hybrid car to be developed in 2015.

We have seen that there are some new impetuses that will drive the development of the automotive industry. There will be major opportunities in the development of the western region. Currently, there are only 50 vehicles per 1,000 people in China, and in mature markets, this figure has reached 800 units. . In another case, the emergence of second and third-tier cities, second-tier cities will become the engine of the future industry, economic growth will further expand to the western region of China, which is the driving force for the development of the automotive industry.

Chinese manufacturers should pay attention to the shaping of brands and the cultivation of human and technology

China's auto market has experienced a long period of development. Its advantage is that there are many opportunities in this market, not only the opportunities brought about by the continuous development of the market itself, but also for Chinese auto manufacturers. Seizing the opportunity and moving toward the global market, the following is the main content of my speech. Let's talk about the major challenges facing the industry now and in the future. In my opinion, there are three major challenges: Market share is dispersed; Chinese manufacturers need to establish brand value. Talent development and technical capabilities,

I think that the Chinese auto industry should continue to develop its own talents and technologies. Afterwards, I discussed these three challenges and proposed some possible solutions.

This picture is very complicated. It actually shows the industry segmentation situation. The figure in the lower right corner shows the relationship between OEMs and other manufacturers. This shows that more integrations are needed between them and manufacturers have the ability to invest. And we have the ability to achieve efficient operations. We know that about 20 automakers are investing at the same time to establish themselves as world-class auto makers, but the funds are far from enough. To achieve such a goal, the funds are insufficient. Time is not enough. This is an inefficient process. At the same time, 150 companies compete with each other, but only a few have controlled 90% of the market. This situation is not very favorable for sustainable development.

The obvious solution is that this industry needs to be integrated and the government has taken the right steps. We will face many challenges. The integration will be very challenging and difficult. It will require market forces to further enter and promote integration, and regional auto manufacturers The integration will play a major role.

As you can see from the above, the government is developing ten major manufacturers, one-level, two-level, three-level, one-level production capacity of more than 2 million vehicles, two-level one million vehicles (manufacturing capacity), and three-level Companies that may account for about 7-10% of market share. The alliance between these manufacturers has not yet formed, that is to say, their relationship in the market is very fragmented and does not form a good joint relationship.

Another challenge that I would like to talk about is also a lot of news headlines. To create a brand value for Chinese manufacturers, we know that some local protectionism has no way to protect those bad brands. For China, the brand adds. Value cannot always be achieved by local protectionism. Poor brands have no way to survive forever, and brand value will ultimately determine whether they can develop in the market for a long time. Low cost is not value, if low cost cannot bring High quality or high technology does not in itself constitute one of the brand values.

Technology and solutions are critical. To further advance, China must consider not only providing low-cost products to consumers. Auto manufacturers and component manufacturers must constantly invest in technology. Now they are in Chinese brands. This point is relatively lacking, and requires more substantive content. The main challenge we mentioned here is to build local brands, make full use of high technology and bring high-tech products. Price wars are only a price strategy, but the big companies in the world rely on the true value of their products to compete. This is an effective way to increase the value of the brand. Therefore, investing in technology and developing suppliers at different levels. This relationship is a long-term strategy.

The third challenge is also one of the “two Ts” that I mentioned. One T is human resources, and the other T is technical capability. Here we talked about the brand building. It is actually an ever-evolving technological capability that can meet the needs of consumers. The sustainable technological development cannot be achieved without the support of qualified personnel. We must develop our own intellectual property rights to achieve this goal. It is necessary to recognize the importance of human resources. Now many managers and engineers in the automotive industry are very young. Compared with their international competitors, they still lack experience. In terms of supply and demand, management personnel and technical experience will be In the future, China's auto industry is very scarce.

In terms of providing solutions, I think these are the most basic. First, investment, and second, there are priorities. Manufacturers must establish long-term, joint development relationships and cooperate with suppliers at different levels. Benefits of this approach It means that manufacturers can work with their suppliers to design products that best meet the needs of the market and customers. They must work with their suppliers to develop technologies that are critical to the development of the industry and talent development.

Another point is very interesting. In fact, the recent economic crisis and emerging technologies have provided us with new opportunities for Chinese automakers to find good talent in the international market and acquire advanced technologies. Some overseas technologies It is now available for purchase. This can increase the quantity and quality of technologies that Chinese automakers have mastered. Actually, this is a fusion of technologies. It can also help Chinese automakers bridge the gap between expertise and knowledge. For example, in hybrid vehicles, there are no leading automakers in this industry. Chinese automakers can consider leapfrog development and take the lead in hybrid vehicles.

Finally, although I emphasize the need to invest in success, but also have a key focus in order to succeed.

Delphi and how we solve these three challenges:

First of all, let's take a look at the capabilities of R&D and engineering development. We established the Delphi China Technology Center in China. Everyone can see this small building. Our engineers are all working there. At the beginning, they didn’t have any patents, they just did engineering design. We We can do some product design for our customers, but we do have this willingness to invest, and we are constantly building our ability to meet customer needs. Within six years, we have developed this R&D center into a global leader in R&D. The center not only serves the Chinese market but also the world market. Now our team of engineers is developing their own new products. With system engineers, we have our own patents and can also do unique product design. Now our number of patents has exceeded 30, which is an onboard information receiving system. It allows the driver to entertain and receive information in the car, as well as some EMS systems.

What shows here is how Delphi uses its capabilities to help Chinese manufacturers build their own brands. We can help Chinese manufacturers take charge of developing different systems for vehicles. For example, we can be responsible for electronic control systems, linkage systems, and automobiles. Among the brake systems, etc., we can also help Chinese manufacturers develop certain systems in the development of hybrid vehicles. For example, we are working with FFC.

On the whole, China's auto industry used to be a poor one. Now it has gone to victory. It will make more achievements in the future. The Chinese market is growing, but it also faces challenges, such as market segmentation, building brand value and human resources. With the development of technology, Delphi is very optimistic about the future. We will continue to invest in China's production capacity, and we are also very willing to cooperate with Chinese manufacturers to meet the challenges ahead.

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