BEIJING -- When SKF Automotive Division of Sweden starting selling bearings in China in 1995, the technology it provided was far from new. But it was good enough for Volkswagen AG's only model in production in China, the Santana sedan.
A few weeks ago, SKF started production of its latest-generation bearing at a new plant in Shanghai. Volkswagen -- and all of SKF's other China customers -- asked for it. "We have to supply (auto manufacturers) with the same products we supply them with in Europe," says Derwyn Roberts, general manager of SKF Automotive Division's operations in China.
"The consumer here is becoming more demanding." Companies that hope to supply China's domestic market, take note. China's car market may have only taken off five years ago, but Chinese consumers want the latest technology, even down to the wheel bearings.
So companies must live with real worries about intellectual property theft because the market is demanding they bring their best stuff. "Chinese consumers don't want to feel like they are being treated like a Third World country," says Philippe Coquelle, head of automotive industry research at AC Nielsen China.
"They want the latest technology inside because it is available." To be sure, few drivers could tell you what the bearing system does. But some can detect a smooth ride. And automakers can boast that they have the latest technology. "The Chinese carmakers are demanding a very high level of technology to boost their brand," says Dan Collins, Asia Pacific sales director for Trico Products, a wiper blade maker in Rochester Hills, Mich.
"Their biggest marketing tool is technology. "We expect to localize production in the future as demand ramps up," says Collins. Localization allows suppliers to meet automakers' demand for the latest technology at a low price.
But with local production come worries of intellectual property theft. Engine component manufacturer Mahle GmbH, of Stuttgart, wrestled with that fear, but decided to bring its best technology to China anyway, says Weiping Yang, director of Mahle's technical center in the Shanghai suburbs.
Yang says Mahle figures using the most up-to-date technology gives it a competitive edge and keeps it one step ahead of copiers.
You may e-mail Alysha Webb at [email protected]
