Chinese Supplier Sees Market Opportunity
2009-04-17 Source：english.chinabuses.com
Dongying Xinyi Auto Fittings Co. Ltd. -- China's largest maker and exporter of brake rotors, pads, plates, shoes and drums -- is building a factory complex on 530,000 square meters of old farmland outside the city of Dongying. Within five years, it wants to expand it into the largest center in the world for making auto friction products, with an annual capacity of 50 million sets of brake pads.
Company president Hu Zhichao sees foreign cost cutting in the midst of the global downturn as an opportunity to grab market share from competitors at home and abroad.
An ongoing 300 million rmb ($44 million) capacity upgrade should be complete in a few months. It will enable Xinyi to supply its top quality products in Detroit for a total landed cost (meaning cost including shipping and losses incurred in transit) of at least 40 percent lower than suppliers in Mexico, he reckons.
For exporting, making Xinyi's products involves the labor-intensive processes of stamping, casting and machining. With benefit-inclusive wages for a machining worker of around $1.75 per hour (compared to $6 in Mexico and $35 in Michigan), Shandong has a big edge.
"India and Brazil may be just as cheap, but they don't have China's capacity because they don't have China's huge home market," Hu says.
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