Early bet on China pays off for Delphi
Two decades ago, Delphi bet early -- and big -- on the China market, and that investment is paying off.
Delphi is a dominant supplier in China. Delphi holds the No. 1 or No. 2 market position in China for 75 percent of the product sectors in which it operates, J.P. Morgan says.
The company set up shop in China in the 1990s, selling parts to Volkswagen and supporting Shanghai GM, which was established in 1997.
The rivalry between its two biggest customers created a delicate situation for Delphi, said Marcus Chao, the president of Delphi China from 1996 to 2001.
At dinners and other public events, the Delphi contingent would try to place itself between GM and VW -- China's two biggest foreign automakers -- to avoid any displays of favoritism, Chao recalled.
One of Delphi's early ventures in China was a battery plant in Shanghai's Pudong district, a former rice field across the river from the city's historic Bund business district.
Delphi's Packard Electric division also opened a wire harness plant in Anting, a suburb of Shanghai.
"Half the wire harnesses were for export and half were for domestic use," Chao said. "We had to find a way to survive, so we leveraged the export business."
But as China's auto output soared, Delphi made more components for that market. From 2005 through 2011, Delphi's annual revenue in China quintupled, to $2 billion.
You can reach David Sedgwick at email@example.com.