SEOUL (Bloomberg) -- On July 1, Nobuaki Katoh became an honorary citizen of South Korea. That's remarkable not only because he hails from regional rival Japan, but also because he runs the top component supplier for Toyota Motor Corp., the biggest competitor of Korea's Hyundai Motor Co.
Katoh, president of Denso Corp., partly owned by Toyota, received the citizenship certificate at a groundbreaking ceremony for the company's new Korean factory.
The plant, which will supply Hyundai and its sister enterprises, illustrates a shift in the auto parts industry, from suppliers linked closely to one car manufacturer to a handful of global giants that build components for multiple automakers.
"Suppliers are diversifying because they want to reduce the risks that come with being too dependent on one automaker, and to strengthen their price negotiating power," said Lee Sang Hyun, an analyst at NH Investment & Securities Co.
Denso's South Korean expansion comes as Johnson Controls Inc., Delphi Automotive Plc and Robert Bosch GmbH, Denso's largest global rivals, build up their presence in Japan with plans to win Toyota business.
The change is being driven by automakers.
Toyota, for instance, is seeking new suppliers to help it winnow parts variety globally and reduce the risk of parts shortages after natural disasters such as earthquakes and floods. And Hyundai this year diversified its supplier base when it contracted with Denso to make heaters for its Sonata sedan in the United States.
The reshuffle is driving expansion at parts makers across Asia and shaking up the supply chains of auto producers. Japan imported more auto parts in June than in any month since October 2008, according to data compiled by Bloomberg.
Johnson Controls, the world's largest producer of car seats and batteries, is expanding in Japan. Germany's Bosch has said it expects to benefit as Toyota cuts its reliance on Japanese suppliers in favor of larger global companies.
And French component maker Faurecia SA is expanding in China and the United States as its controlling shareholder, PSA Peugeot Citroen, suffers and the European market continues to contract.
Denso, which makes components ranging from seats to electronic controls to air conditioners, intends to plow 400 billion won ($350 million) into South Korea by 2020.
The company supplies Korean clients with smart keys that can automatically unlock doors at a distance and devices that project information on the windshield. Denso declined to provide an executive for comment.