Self-owned brands busy self-producing

Citing an undisclosed source from the blog of Cui Dongshu of SOHU, in the year of 2009, the Chinese passenger vehicle market got amazingly hot. Accompanied by the high growth in sales, the production and supply chains of enterprises are changing largely. Driven by the interests and policy adjustment, to self-owned brands and joint ventures, there is a trend of adopting opposite ways to achieve the parts procurement.

　　Self-owned brands Busy with Independent Evolution

In 2009, self-owned brands seize the good opportunity to promote sales as well as enhance their industry chain. In the era of low-profit, it is getting harder for enterprises to explore new sources of profits. As Management Guru, Professor Michael Porter has pointed out in his book competitive advantage; success can be achieved only by low cost or the high quality of products. As a very famous saying independence come from self-reliance, enterprises can only get more profits by reducing the costs and improving technologies. Therefore, so self-owned vehicle companies now focus on their capability of producing core components, especially the independent evolution of engines.

　　1. To maintain supply chain- the way to reverse the outsourcing of passive situation.

Currently, there are some domestic suppliers specializing in the production of engines, such as the two large-scale engine plants of Mitsubishi in Shenyang and Harbin. In addition to the domestic vehicle models of Mitsubishi, the products of these two plants have been served the domestic automobile enterprises. In the prior stage, a large proportion of self-owned enterprises use Mitsubishi engines, which, has led our automobile companies into a very passive situation.

The products of self-owned brands can hardly meet the market demands since Foreign Engines became a constraint of the sales growth in the hot market of 2009. As a result, it is necessary for the domestic brands to produce their own engines.

　　2. To improve technologies

Self-owned brands usually purchase mature engine products from professional suppliers, which can largely shorten the period of developing and introducing a new model. These foreign engines have a high level of reliability since they are mature at both the technology and accouplement. However, their functions are relatively moderate as they rarely adopt advanced technologies. In the future, due to the fuel consumption limitation and lower fuel consumption competition, self-owned brands must upgrade the technologies independently or achieve technical leaps relying on outside sources to ensure the competitiveness of their engines.

　　3. To expand profits gradually

As China has become the world’s largest passenger car market, market space of the enterprises is also expanding. Since the market share of these self-owned brands are increasing, the growth rate of their sales is getting higher. The scale merit decides the level of independent evolution. Nowadays, many independent vehicle companies have gained an annually sales of 300,000 or even 500,000 which shows the realization of scale merits of independent engine production. To lower down the costs of transportation, manufacturing and promotion will both become the advantages of self-owned brands and accelerate the process of independent production of parts and components.（translator：Yalong/Jessie）

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