SHANGHAI -- China may be the world's largest auto market, but domestic suppliers have not taken advantage of it.
Most Chinese parts producers tend to be small or medium-sized companies with limited r&d resources and inadequate technology, Chen Kangren, president of the China Auto Parts & Accessories Corp., said at the Automotive News China Conference.
"The industry is highly fragmented," Chen said. "It's difficult to have economies of scale. China has very small companies scattered everywhere. There is a lack of r&d and a lack of innovation."
CAPAC, of Beijing, is an umbrella organization for dozens of Chinese parts suppliers that produce components for automakers and the aftermarket.
The government-owned company is taking steps to overcome the competitive disadvantages of its smaller member companies. For example, CAPAC is building an r&d center in the city of Suzhou to prove technical expertise to its subsidiaries, Chen said.
The company also is seeking American partners willing to share technology in return for access to China's vast market for auto parts. Chen has set up a technical center in suburban Detroit and has held discussions with several U.S. suppliers about possible partnerships.
CAPAC is taking steps to consolidate the supplier industry. Chen said consolidation is necessary to restore a balance between suppliers and automakers.