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Wheel and Rims Industry: The Case for China and the United State - Research Paper Example

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Wheel and Rims Industry: The Case for China and the United State

They study market trends and change their products to meet customer demand. With methods of communication growing and new technology allowing for instant information, the exchange of information can determine how companies can gain advantage over the others. The company which looks ahead to identify and resolve global barriers will garner a larger market share.

China is the market of the future, and successful companies expanding their bases throughout the world to see China as a necessary market. Why The country that is infamous for the billions of people it harbors also has the largest workforce and the largest number of potential consumer as a consequence. This combined with the increasing trade liberalization, have made the country one of the world's producer and consumer.

It is against this backdrop that we will be analyzing the automobile parts industry. Our focus is the wheel and rims trade with the United States and China. Our goal is to determine the past, the present and the future trends in the trade. In the course of the discussion, it is hoped that the reader can gain important sights regarding the topic.
The Booming China Automobile Parts Industry

China's car wheel rim and cover industry is growing rapidly, fueled by the booming auto industry in the mainland. Ford, Fiat, Toyota, GM, Volvo, Volkswagen, Honda, Nissan and Isuzu are some of the international automakers that have set up production facilities in China.

The country exported US$562.2 million worth of wheel rims and covers in 2003, and exports from January to April 2004 grew 71 percent from US$158 million in the first four months of 2003 to US$270.3 million. Impressive growth is expected to continue in the coming years. Exports of aluminum wheel rims totaled 26.4 million units in 2003, up 47 percent from 2002's 18 million units. Mining and metal industry information provider Beijing Antaike Information Development Co. Ltd projects aluminum wheel rim output in 2004 will increase more than 120 percent to 40 million units against a capacity of 45 million. Capacity is forecast to increase 10 million units each year to 2009.

This is reiterated in the Global Sources Supplier Survey, which shows the majority of companies forecasting increased sales in 2005. Most of them will also increase production capacities to meet the anticipated surge in export demand.
China has more than 200 manufacturers of car wheel rims and covers, but only about 70 of these suppliers are capable of export. These companies produce aluminum and steel wheel rims, and aluminum and ABS wheel covers or hubcaps. Aluminum wheel rims, which dominate production and exports, are used for cars, SUVs and light-duty trucks while steel wheel rims are for heavy-duty trucks. Among the 37 companies featured in this report car, wheel rims dominate export production with a 56 percent share. Truck wheel rims make up 31 percent of exports. (Global Sources, 2004)

Heavy inflow of foreign investment - primarily from Hong Kong, Taiwan and Japan - is centered on aluminum wheel rim production. The resulting JV companies produce wheel rims for both the China factories of these leading automakers, and for export to the aftermarkets.

Private enterprises are also lured by the strong growth of the aluminum wheel rim industry. Twenty-two percent of the companies surveyed for have been in the industry for five years at the most. These suppliers produce almost ...Show more

Summary

Finding the cheapest raw material for an acceptable standard of quality is the goal of every manufacturing firm especially in a business environment where competition is at its most aggressive. Automobiles have become a symbol of status and fulfillment…
Author : bbradtke
Wheel and Rims Industry: The Case for China and the United State essay example
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