Delphi Corp. said Monday in Shanghai that it is establishing a scholarship program at Shanghai's Tongji University to further its goal of sourcing $1 billion in components from China by 2007.
"We hope to encourage local students to pursue formalized academic training in automotive-related fields, including global supply management," said Delphi chairman J.T. Battenberg III. "We hope they will choose to make their career at Delphi."
He led a high-powered delegation that also included Delphi Corp vice chairman Donald Runkle, Delphi Corp vice president of sales and marketing Timothy Richards, and Delphi Corp president of energy and chassis systems Guy Hachey to China, underscoring the market's importance.
Delphi's 2003 consolidated and unconsolidated China sales were $850 million; this year it expects sales to top $1 billion.
Last year, the supplier sourced $200 million in parts from China in 2003; this year, sourcing will again equal around 20 percent of sales, said Battenberg.
Figuring sales growth of 15 to 20 percent per year, by 2007 sourcing from China should hit $1 billion, he said.
Delphi hopes continued sales growth in China can take up slack from a slowing US market. Delphi recently said it would report a net loss in the third quarter because of production cuts by major customers like General Motors, which lowered its production target nearly four percent.
"China is critically important (because) America is a maturing market," said Richards.
Delphi figures China's automotive market will grow by 10 to 15 percent for the next three to five years, "which certainly surpasses the expected growth rate in the rest of the world," said Battenberg.
The recent sales slowdown in China "is not something that will change Delphi's long-term plans. We've been here 11 years; we plan on being here much longer," said Richards.
Delphi also held a ground-breaking ceremony Monday for its first research and development center in China. Phase one of the center is scheduled to open in June 2005 with 500 engineers. By 2010, the Center aims to have 1,500 engineers.
Delphi's investment in China, including the R&D center, is around $500 million.