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Hangzhou a magnet for auto makers and parts suppliers
July 23, 2009, Thursday
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HANGZHOU makes its name in spare parts production which has formed the backbone for its expanding passenger automobile production. Jin Jing pops the clutch. Hangzhou is one of the first Chinese cities to produce vehicles. That was back in 1958 but plans for developing the passenger auto industry were suspended in 1978 due to lack of coal, steel, other commodities and efficient transport. There was another setback in 1994 when the government decided to focus on the auto parts sector to support other cities.
But over the past few years, Hangzhou has attracted several big auto projects, including the 2-billion-yuan(US$292.76 million) engine plant for China Sinotruck and the US$94 million transmission plant for Iveco Motors.
Also present are commercial vehicle manufacturers such as Dongfeng Hangzhou Motor Co and Dongfeng Nissan Diesel.
Despite its achievements, Hangzhou is relatively small in industrial scale, says He Xiulin, an official from Hangzhou's Economic Commission.
"There has been a well-developed industrial layout across the nation and it is not easy for Hangzhou to develop its auto industry," says He. "But we have our advantages, including good transport location, huge market potential, and consumers' strong purchasing power. And our auto parts industry takes the lead nationwide."
After years of development, a well-structured auto parts industry has become the backbone for Hangzhou to develop its complete cars.
So far, Hangzhou-made clutches account for 30 percent of the domestic market. It's about 25 percent for steering systems and 65 percent for universal coupling.
"The world financial crisis is providing us an even better opportunity," Hangzhou Mayor Cai Qi says.
"As international car makers are undergoing consolidation worldwide, they intend to outsource more of their spare parts business to reduce cost."
Wang Zhuangzhi, vice president of Gonow Group, says about 80 percent of its auto parts suppliers are within 300 kilometers of Hangzhou and 55 percent of them are in Zhejiang Province. That means production cost can be significantly reduced through local production.
"We could save about 3,000 yuan to 5,000 yuan on the cost for each model and that would be an irresistible attraction for any entrepreneur," he adds.
Also, as most of minivan buyers are from Shandong, Zhejiang and Guangdong provinces, the car maker will also benefit from lower logistics cost.
Chen Guorong, general manager of Taiwan Yulon, says that convenient transport between Taiwan and Hangzhou is the reason the car maker located its Chinese mainland headquarters for Luxgen in Hangzhou. Green vehicles Fuel-efficient vehicles will be a major part of expanded auto production.
Hangzhou, which started using electric vehicles for public transport in 2005, plans more eco-friendly vehicles on major tourism routes. It plans to promote green vehicles in the taxi fleet, postal fleet and other public departments.
Around 3,000 fuel-efficient and alternate-fuel green vehicles are expected on the roads by 2012 in a pilot program, the city government says.
China's Wanxiang Group plans to invest 1.37 billion yuan (US$200.6 million) in developing new energy-saving vehicles in Hangzhou. By 2010 its production base will have a capacity of 1,000 electric commercial vehicles and 1 billion watts of lithium batteries.
The SUV maker Zhejiang Zotye Auto Co Ltd is negotiating with authorities to build an electric car factory in Hangzhou.
But over the past few years, Hangzhou has attracted several big auto projects, including the 2-billion-yuan(US$292.76 million) engine plant for China Sinotruck and the US$94 million transmission plant for Iveco Motors.
Also present are commercial vehicle manufacturers such as Dongfeng Hangzhou Motor Co and Dongfeng Nissan Diesel.
Despite its achievements, Hangzhou is relatively small in industrial scale, says He Xiulin, an official from Hangzhou's Economic Commission.
"There has been a well-developed industrial layout across the nation and it is not easy for Hangzhou to develop its auto industry," says He. "But we have our advantages, including good transport location, huge market potential, and consumers' strong purchasing power. And our auto parts industry takes the lead nationwide."
After years of development, a well-structured auto parts industry has become the backbone for Hangzhou to develop its complete cars.
So far, Hangzhou-made clutches account for 30 percent of the domestic market. It's about 25 percent for steering systems and 65 percent for universal coupling.
"The world financial crisis is providing us an even better opportunity," Hangzhou Mayor Cai Qi says.
"As international car makers are undergoing consolidation worldwide, they intend to outsource more of their spare parts business to reduce cost."
Wang Zhuangzhi, vice president of Gonow Group, says about 80 percent of its auto parts suppliers are within 300 kilometers of Hangzhou and 55 percent of them are in Zhejiang Province. That means production cost can be significantly reduced through local production.
"We could save about 3,000 yuan to 5,000 yuan on the cost for each model and that would be an irresistible attraction for any entrepreneur," he adds.
Also, as most of minivan buyers are from Shandong, Zhejiang and Guangdong provinces, the car maker will also benefit from lower logistics cost.
Chen Guorong, general manager of Taiwan Yulon, says that convenient transport between Taiwan and Hangzhou is the reason the car maker located its Chinese mainland headquarters for Luxgen in Hangzhou. Green vehicles Fuel-efficient vehicles will be a major part of expanded auto production.
Hangzhou, which started using electric vehicles for public transport in 2005, plans more eco-friendly vehicles on major tourism routes. It plans to promote green vehicles in the taxi fleet, postal fleet and other public departments.
Around 3,000 fuel-efficient and alternate-fuel green vehicles are expected on the roads by 2012 in a pilot program, the city government says.
China's Wanxiang Group plans to invest 1.37 billion yuan (US$200.6 million) in developing new energy-saving vehicles in Hangzhou. By 2010 its production base will have a capacity of 1,000 electric commercial vehicles and 1 billion watts of lithium batteries.
The SUV maker Zhejiang Zotye Auto Co Ltd is negotiating with authorities to build an electric car factory in Hangzhou.
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