BorgWarner, as an authentic parts supplier, has many patented technologies in the engine's cooling system, turbocharger system, timing system, and drive train. It is the world's leading company in these fields, with one-year sales. About three to four billion dollars. BorgWarner has been in the automotive manufacturing field in China for many years and has maintained a low-key attitude. As China's auto products become more and more abundant, BorgWarner's involvement in the Chinese auto industry is increasing. The irreplaceable role of its dedicated technology is increasingly evident. On December 20th, in the late afternoon of the year, our reporter interviewed Shen Hui, president of BorgWarner China.
China Industry News: This year, the Chinese auto market has been slowing growth. The economic efficiency of auto companies has dropped by more than half year-on-year. Will this shake your confidence in continuing to invest in China's auto parts industry?
Shen Hui: We have not wavered. We have been doing according to the original plan.
First of all, our customers are located in various market segments. There are cars, trucks, and buses. There are more than 50 customers in China. Therefore, the risk of operations is low and the success is very high. At the end of last year, the company established a China regional headquarters in Shanghai and concentrated its work on finance, human resources, procurement, information technology, and markets in China. Currently, BorgWarner operates four factories in China, one in Beijing, one in Shanghai, and two in Ningbo. They are the engine and transmission components. For example, Warner Shenglong Ningbo Co., Ltd. mainly serves as engine cooling system, engine water pump, etc. Another Ningbo plant is a turbocharger for passenger cars and commercial vehicles. In terms of drivetrain, Beijing has a company that manufactures automotive powertrains, mainly smart torque power systems. BorgWarner accounts for 80% of the company, and BAIC holds 20%. In Shanghai, a joint venture named NSK is built. The company mainly makes friction plates for automatic transmissions.
Second, the global automotive market, including the North American market, is not very booming this year, but the Chinese auto market has improved rapidly in these two years. The Group’s overall evaluation of the Chinese auto market is still very optimistic, so it attaches great importance to China. The low profits of domestic automakers this year are mainly compared to the “blowout†of the auto market in previous years. The current profits and growth are actually far higher than the international average. Everyone thinks that this year's car market is not good. It is mainly because they have used the good days of high profits before. Now they don't earn so much, so they don't feel used to it. For BorgWarner, we follow customers, where our customers grow, and where we go to support them. This is a long-term relationship. From the current perspective, BorgWarner's investment plans and technology transfer plans in China have not changed.
"China Industry News": At present, the competition in China's auto market is essentially the competition of several major foreign manufacturers, and parts and components industries also have such a situation. What is BorgWarner's advantage in seizing the market? What core technologies can be provided for China's parts and components industry?
Shen Hui: The integration of parts and components companies is certainly a trend. But why is our company successful? The first is based on innovative technologies. The products we manufacture and sell are mainly components of powertrains, with high technological content. We can occupy a large market share by virtue of our technological advantages. For example, turbocharger sales and sales are the second largest in the world. The sales volume of parts for four-wheel drive systems is the largest in the world. This is our technical advantage. Second, we continue to reduce costs in the world, emphasizing localized production. Our localization may go further than other companies. Our localization refers to talent, raw materials, and equipment. For example, 50%~60% of raw materials are purchased locally to cultivate our suppliers; most of the management staff are also local employees. Some equipment is doing well in China and we have purchased locally, which will reduce costs.
BorgWarner is very supportive of China's current energy conservation and environmental protection automotive industry policy. We can also provide technical support in this respect. For example, cold start technology, turbocharging technology, thermal management of emission control, dual clutch technology. Components manufactured using these technologies will help the vehicle reach the state's advanced environmental protection and energy consumption standards, and will support the country's current promotion of hybrid technology.
"China Industry News": As a president of a world-renowned parts and components company in China, what advice do you have on the independent development of China's auto industry?
Shen Hui: The current hot issue in the domestic auto industry is self-development. This is a very good thing. However, from the perspective of world development trends, if self-development is to be carried out, it should actually focus more on the autonomous development of parts and components. This is more important than the entire vehicle. I think domestic companies are relatively weak in this regard, focusing on OEMs who do not pay attention to parts and components companies. From a foreign point of view, vehicle manufacturing involves only four major processes. The development of key components and core technologies is done by the parts factory. But now, from the perspective of the industry and the publicity of the media, it is entirely focused on the independent development of the main engine plant. If so, the cost of manufacturing will not fall. why? If a main engine manufacturer develops advanced technology, but the market size is limited, the price reflected to the end customer is high. In addition, there are tens of thousands of parts on a car, so it is impossible for the main engine plant to develop one by one. Therefore, independent development must be independent development of parts and components.