ERJ staff report (AN)
Beijing -- Foreign auto suppliers must invest rapidly in China R&D facilities to tap a market that is maturing rapidly and demanding more high-tech features, executives say.
Tier 1 suppliers from overseas have technological and financial advantages over local Chinese rivals. But increasingly they need to tailor their products to local needs, said Majdi Abulaban, president of parts maker Delphi Asia Pacific.
"In the last few years we're seeing a major shift," Abulaban, who also heads global electrical systems and electronics at Delphi, said at the Automotive News China Conference in Beijing.
"We need more locally developed components designed specifically in this market for this market," he said.
Delphi, which has its headquarters outside Detroit, arrived in China nearly two decades ago and has two r&d tech centers here with 1,300 engineers. Like other suppliers, Delphi has invested in computer-aided design, validation labs, wind tunnels, dynamometers and engineers.
Delphi produces electronics, powertrain parts, thermal controls and various other components.
Germany's Continental AG takes a similar approach toward localizing development for the Chinese markets.
"Local R&D is the critical success factor," Continental China President Jay Kunkel told conference attendees.
"Competition is driven by technology," he said. Continental has 10 r&d sites in China. It produces a broad range of parts, including brakes, chassis systems, safety electronics and instruments.
With Chinese customers becoming more sophisticated in their tastes, demand is increasing for cars laden with high-tech features common in Europe or North America.
Furthermore, steady increases in Chinese labor costs are exceeding the pace of productivity gains from labor-intensive manufacturing processes, he said. This pressures suppliers and automakers alike to turn to more advanced automated techniques.
One limiting factor: Finding top-notch engineers is still hard.
"Quantity is one thing, but skill sets is another," Kunkel said. "We need these skill sets in order to also further expand our technology footprint here in China."
That hasn't slowed down hiring too much.
Since 2010, Kunkel said, Continental has been hiring an average of 375 employees a month in China to meet surging demand in the world's biggest auto market.
From Automotive News (A Crain publication)