The fast development of China's automobile industry is attracting a large number of international automobile electronic system producers to the Tianjin Economic-Technological Development Area (TEDA).

The area is now a center for the manufacturing and research and development (R&D) of automobile electronic systems.

More than 20 auto electronic device manufacturers from Japan, the Republic of Korea and the United States, such as Motorola, Fujitsu and Matsushita, have settled in the TEDA and the number is growing, said Pi Qiansheng, member of the Standing Committee of Tianjin Municipal Committee and secretary of the Working Committee of TEDA.

These enterprises' combined sales of automobile electronic products totaled 5 billion yuan (US$602 million) in 2003, a 46.8 percent increase compared to the previous year.

Pi attributed the fast development to the expanding automobile market in China and the flourishing auto manufacturing industry in TEDA.

Official statistics indicate China's automobile sales reached 4.4 million units in 2003, and sales of auto electronic products totaled 55 billion yuan (US$6.6 billion), up 33 percent and 42 percent respectively from the previous year.

Global Insight, an international automobile market research company, predicts China's global automobile sales are expected to witness a 25 percent increases in 2006 and 2007.

The cost of electronic systems usually makes up to 30 to 50 or even 70 percent of the total cost of a car.

"There is a potential market here, and the situation is exciting for auto electronic system makers," Pi said.

There are two major auto manufacturing enterprises in TEDA: Tianjin Daihatsu and a joint venture involving the Tianjin FAW (First Automotive Works) Xiali Co and Toyota Motor Corp.

"The promising automobile industry in TEDA and, in particular, the investment made by Toyota, is giving confidence to international auto electronic product companies about their development in the area," Pi said.

Motorola

Motorola has signed an agreement with TEDA to set up a new plant in the area. The project will be developed in stages.

The first-phase construction will be completed by the end of this year and will go into operation in 2005. The new plant will mainly produce embedded electronic items, long-distance information solution systems and power train products.

The project will also produce embedded computers and energy systems.

"However, the development of automobile electronic products will be our focus," said Daniel Shih, president for Motorola China.

"The new project will enable Motorola to be a key supplier of automobile electronic equipment in China," he said.

He said that Motorola had not taken part in the automobile electronic product area until recently because China's automobile market was not fully operational, and most cars made in China were assembled with imported parts.

However, the situation has changed. China's annual car sale is expected to reach 10 million units in 2010. A new car needs hundreds of electronic components including semi-conductors and transducers.

Imported components and parts will not meet the increasing demand and more locally made parts will be used, he said.

"When the auto electronics systems sector is not a supplement to the machinery industry in China, the market of automobile electronic products in the country will no doubt be 'a new world' for Motorola," he said.

Hyundai

The Hyundai Autonet Corporation, a key supplier of Hyundai Automobile Corp and a leader in the auto electronics industry in the Republic of Korea (ROK), has decided to expand the 10-year-old Hyundai Electronics (Tianjin) Co Ltd in TEDA.

The expanded project - newly-titled Hyundai High-Tech and New Electronics (Tianjin) Co Ltd - is expected to make breakthroughs in the technology of high-end automobile electronic products, including safety airbags and GPS systems.

Apart from manufacturing, Hyundai's research and development, sales and after-sale service sectors will also operate from Tianjin.

To inject US$5 million into a new project in TEDA is Hyundai's important strategic adjustment in accordance with the rapid progress of China's automobile industry, a Hyundai spokesman said.

The new project, whose annual sales goal is US$200 million, is expected to go into full operation by the end of this year.

Both of its production and marketing strategies will witness great changes, he said.

These changes include:

All Hyundai products to be sold in the Chinese market will be designed in the TEDA plant instead of the old method of design in ROK and manufacturing in Tianjin.

The situation that all products are exported will be reversed. Sales on the Chinese market will increase gradually and are expected to make up half of the total sales from the new project.

The new company's production focus will be changed from video and audio systems to high-end products, such as safety airbags and GPS systems.

The new automobile electronic system company will make large enterprises its targeted customers and is making efforts to become a supplier of FAW-Toyota and FAW-Xiali in TEDA.

Panasonic

Established last year in TEDA, Tianjin Panasonic Automobile Electronics Development Co Ltd will develop through a two-stage construction.

The first-phase project, which costs US$12.5 million, is designed to become a R&D base for video and audio equipment and satellite navigation systems used in automobiles.

It is Matsushita's fourth R&D center in the world. The rest are in Japan, the United States and Europe.

Matsushita's choice of TEDA is based on Toyota's investment in the development area, China's promising market and the qualified technology personnel in Tianjin, said Takami Sano, director of Matsushita Electric Industrial Co Ltd and president of Panasonic Automotive Systems Company.

(China Daily September 8, 2004)