Auto cluster wins global contracts

Wang Qian

Over the last eight years, the Qingdao Tonghe Automobile Parts Industrial Park (TACIP) has developed into the destination of choice for overseas investment in the lucrative field of auto parts manufacturing

According to Tang Yunli, deputy secretary of the Tonghe Industrial Estate Administration Committee, the Tonghe industrial park is currently home to more 100 auto parts businesses, representing a total investment of $320 million. This has seen the park producing more than 300 different automotive components, including engine parts, vehicle electronics and driving mechanisms. As a result, the annual sales revenue of the park has reached 3.6 billion yuan, with annual foreign currency earnings of $250 million.

Its success is due, in part, to the park's considerable geographical advantages. To its east, the park, situated in the Shandong province, has easy access to South Korea and Japan, both major automotive manufacturing nations.

It is also within 400 km of a number of domestic car manufacturing plants, including the FAW Group Qingdao Auto Works, the Yantai Dongyue Auto Works, the Jinan Heavy-Duty Truck Factory as well as the Korean Hyundai Motor Corp.

TACIP was set up in 2007 to accelerate the development of the region's auto parts industry. The construction of its 4 sq km infrastructure was backed by an initial total spend of 1.15 billion yuan.

A number of high-profile contracts have now been successfully completed in the park, including a $375 million Daedong coach project and a $65 million Donghwa casting project. The latter was carried out by Qingdao Donghwa Casting Co Ltd, Asia's largest auto enterprise and a specialist in producing alumium wheels. It is currently ranked as number two in the world in terms of production capacity.

Tang said: "By 2010, the TACIP is scheduled to have attracted an additional 60 auto parts suppliers, taking its on-site total to more than 180, giving it an annual production value in excess of 5 billion yuan.

"At the same time, our development focus is switching to large city-buses. Over a period of five years, we will strive to become the top production base for auto parts and the leading auto industrial cluster in the East of China or even across the whole country."

Between January and July of this year, the total industrial output value of TACIP reached 2.46 billion yuan, an increase of 14 percent year-on-year. Its industrial added value amounted to 740 million yuan, up 8 percent, among which auto parts output value accounted for 1.52 billion yuan, two thirds of the economic aggregate.

Aside from its geographical and human resources advantages, the TACIP has also seen shifts in the structures of overseas industries as an opportunity to attract foreign investment.

The 2001 arrival of the Daedong Syetem Co Ltd, a key supplier to the Korea Hyundai Motor Corp, also proved a turning point for the park. Since Daedong first opened its doors, the number of ancillary and support companies working alongside it has grown by 40 per cent every year.

With a large number of leading automotive businesses now committed to the park, auto parts manufacturers have been quick to follow suit. Six related business and five auto component companies were set up in the immediate wake of Daedong Corp's arrival. Another such arrival is the Qingdao Yushin Auto Fittings Co Ltd, a major specialized auto parts company, launched following a total investment of $20 million and now achieving a total annual output value of 100 million yuan.

The export of auto parts has become the key element of the park's foreign trade. Its specialist suppliers of vehicle cables and capacitors, for instance, now supply some 60 per cent of the entire Korean market.

The TACIP's 40-strong group of automotive companies now provides auto parts for more than 30 leading auto enterprises at home and abroad, including Korea's Hyundai, Kia and Daewoo, Toyota in Japan, America's GM and HI-LEX, Canada's INTIER, as well as Beijing Hyndai, Dongfeng and Yueda Kia.

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