Market Update Breakfast – China
September 8, 2006

 The China automotive industry
 Production & growth rate
 Opportunity
 Production capacity (current production, production capacity and expansion plan)
 Key automakers
 The China components industry
 Production & growth rate
 Opportunity
 Demands (purchasing plans of major global automakers)
 New measures and tariff (technical barrier)
 Key suppliers (global suppliers and domestic suppliers)

Facts
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4 th Largest economy in the world in 2005
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GDP: USD 2.263825 trillion
GDP growth rate: 9.9%
2 nd Largest auto market in the world in 2005
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Production: 5.75 million units of vehicle
Growth rate: 13.4%
 The largest machine tool market in the world
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USD10.9 billion
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Growth rate: 15%

Production & growth rate
China's Vehicle and Car Production From 1998 to 2005
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
4.44
5.07
5.75
3.25
2.95
2.34
2.07
1.83
1.63
1.09
0.50
1998 1999
0.57
0.60
2000
0.70
2001
Year
2002 2003
2.06
2.26
2004 2005

The China Automotive Industry
117 Registered Automakers,
Of which 90 company’s capacities
Are less than 10,000 units a year.
2002
Production 3.25
Changes, % 38.8
Vehicles
(Million of Units)
2003
4.44
36.6
2004
5.07
14.2
2005
5.75
13.4
2006
(1 – 6)
3.63
28.9
Source: China Auto Industry Year Book

Production & growth rate
Production
Change %
China Car Productions
(Million of Units)
2001 2002 2003 2004 2005 2006e (1-6)
0.7 1.09 2.06 2.26
15.1 55.7 89.0 9.7
2.95
30.5
1.80
46.9

Production of Top 8 Chinese automakers from January-June, 2006 (in units)
1.
Shanghai Automotive Industry Corp
2.
First Automotive Works Corp
3.
Dongfeng Motor Corp
4.
Chang'an Motor Corp
5.
Beijing Automotive Industry Corp
6.
Chery Automobile
7.
Geely Automobile
8.
Guangzhou Automobile
(Source: China Association of Automobile Manufacturers)
621,400
562,900
454,200
369,100
337,100
144,200
105,900
105,700
54.85%
23.28%
26.1%
8.39%
11.94%
72.15%
55.62%

The China Automotive Industry
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Production in 2005: 5.75 million units
Production capacity in 2005: 8 million units
Production capacity expansion plan: 16 million units by
2010

3,000,000
PRODUCTION CAPACITY OF MAJOR AUTOMAKERS IN CHINA
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
FAW SAIC DONGFENG CHANGAN BAIC
AUTOMAKERS
GAIG CHERY GEELY
Production in 2005 Current production capacity Planned production capacity in 2010

The China Automotive Industry

The China Components Industry
2002
Components Statistics
($ billion)
2003 2004 2005
“A Fragmented Industry”
1,540 Registered Enterprises
3,500-8,500 Non-Registered
Total Sales 34.2
Domestic 32.3
Imports
Exports
3.4
1.9
47.9
42.1
9.3
5.8
62.7
52.1
11.3
10.6
71.9
56.1
10.4
15.8
Average Annual Sales Per Supplier:
$5.0 to $10.0 million
Source: China Auto Industry Year Book

Opportunity - Demands
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Daimler-Chrysler (for China operation)
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To spend $840 million in buying parts in 2008 ($100 million in 2005)
BMW (for China operation)
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To spend $300 million in buying parts in 2007
Volkswagen (for overseas operations)
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To spend $1.0 billion in buying parts in 2006 ($300 million in 2005)
Volkswagen (for China operations)
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To spend $2.5 billion in buying parts in 2006
Multinational firms totally (for overseas operations)
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To spend $35 billion in buying parts by the end of 2007

The China Components Industry
Cars
Displacement 2001 2002 2003 2004 2005 2006
<3.0 L
>3.0 L
70
80
43.85
50.7
38.2
43
34.2
37.6
30.28
30.3
25
28.25
Parts & Components
2001 2002 2003 2004 2005 2006
10

The China Components Industry
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“Measures for the Administration of Import of Automobile
Components and Parts Featuring Complete Vehicles”
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Promulgated by the Customs of China, MOC, MOF and NDRC on April 1, 2005
Go into effect on July 1, 2006

The China Components Industry
 Article 21 - Under any of the following circumstances, the imported automobile components and parts shall be considered bearing the features of a complete vehicle:
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Importing CKD or SKD to assemble automobiles.
The total price of the imported components and parts is not less than 60% of the total price of the complete vehicle type.
If, within the scope as prescribed in Article 4 of the present Measures:
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Importing both the vehicle body (including the cab) assembly and engine assembly to assemble vehicles;
Importing either the vehicle body (including the cab) assembly or engine assembly and 3 or more other assemblies (systems) to assemble vehicles;
Importing 5 or more assemblies (systems) other than the vehicle body (including the cab) assembly and the engine assembly to assemble vehicles.

The China Components Industry
 Article 22 - under any of the following circumstances, the imported automobile components and parts shall be considered bearing the features of an automobile assembly (system)
 Importing whole sets of KD components and parts to assemble an assembly (system)
 Importing key components and parts or sub-assemblies to assemble an assembly (system), and the import of key components and parts or sub-assemblies reaches or exceeds the specified quantity.
 The total price of the imported components and parts is not less than 60% of the total price of the assembly (system)

The China Components Industry
“Measures” REALLY means that
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Discouraging automakers from using imported car parts for vehicles they assemble in China and making car by CKD & SKD increases production cost (from 10% to 25%)
Creating an incentive for car parts makers to shift production to
China

The China Components Industry
Opportunity – changes for global suppliers
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From shareholding to share controlling
From JV to WOFE
From market penetration to market monopoly

MAP OF CHINA
Northeast
(Jilin, Liaoning)
Greater Beijing area
(Beijing, Tianjin)
Yangtze river delta
(Shanghai, Jiangsu, Zhejiang)
Middle China
(Hubei)
Southwest
(Chongqing, Chengdu)
Pearl river delta
(Guangdong, Fujian)

The China Components Industry
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Major global suppliers
ASIMCO
Eaton
Delphi
Dana
TRW
Visteon
Lear
BorgWarner
Johnson Controls
Bosch
Siemens VDO
ThyssenKrupp
GKN
Freudenberg
Faurecia
Valeo
Aisin Seiki
Yazaki
Denso
ArvinMeritor
Autoliv
Magna
 Major domestic suppliers
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FAW Fawer Auto Parts Co.
Dongfeng Motor Co., Ltd Parts &
Components Business
Wanxiang Group
Sanhua Holding Group
Wanfeng Auto Holding Group

Global Suppliers in China
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ASIMCO
Parkview Center, 4/F, 2 Jiangtai Road (s), Chaoyang District 100016, P. R. China
(86)10-6438-2750, www.asimco.com
Asimco Meilian Braking System (Langfang) Co.
Asimco International Costing Co.
Beijing Asimco Tianwei Fuel Injection Pump & Nozzle Co.
Zhong Ding Automotive Components Co
Nanyue Fuel Injection & Pump Co.
Sichuan Dan Chi Industry Co.
Hubei Super-Elec. Auto Components Co.
Harbin Feibeng Auto-Elec. Co.
Asimco Braking System (Zhuhai) Co.
Asimco Braking Braking System (Guangzhou) Co.
Asimco Shuangtai Components (Sichuan) Co.
Langfang, Hebei Province
Jiang County, Shanxi Province
Beijing
Ningguo, Anhui Province
Hengyang, Hunan Province
Air-compressor, brake
Casting for engine block and head
Fuel injection pump, oil nozzle
Rubber products
Fuel injection pump
Sichuan Province
Shashi, Hubei Province
Harbin, Heilongjiang Province
Transmissions
Generators, starters
Igniters, ignition coils, relays, switches
Zhuhai, Guangdong Province Disc & Drum type brakes, vacuum boosters
Guangzhou, Guangdong Province Disc & Drum type brakes, boosters
Sichuan Province Wheels
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Eaton
Floor, 300 Huai Hai Zhong Road, Hong Kong New World Tower, Shanghai 200021, P. R. China
(86)21- 6278-5090, www.eaton.com
Eaton Electrical (Suzhou) Co., Ltd. - EES
Eaton Fast Gear (Xi'an) Co., Ltd.
Eaton Fluid Power (Jining) Co., Ltd.
Eaton Fluid Power (Shanghai) Co., Ltd
Eaton Senstar Automotive Fluid Connector (Shanghai) Co.
Eaton Truck and Bus Components (Shanghai) Co., Ltd
Hangzhou Switches Power Systems Co., Ltd.
Shanghai Eaton Engine Components Company, Ltd.
Zhenjiang Eaton Electrical Systems Co., Ltd.
FAW Eaton Gear-Box Co.
Guangzhou Eaton Piston Ring Co.
Ningbo Eaton Shenglong Co.
Suzhou, Jiangsu Province
Xi’an, Shaanxi Province
Jining, Shandong Province
Shanghai
Shanghai
Shanghai
Hangzhou, Zhejing Province
Shanghai
Zhejiang
Electrical circuit protection devices
Transmissions
Hydraulic pumps and motors
Fluid connectors
Fluid connectors
Transmissions
Switches
Engine valves and hydraulic tappets
Electrical devices
Changchun, Jilin Province Transmissions
Guangzhou, Guangdong Province Piston rings
Jingbo, Zhejiang Province Hydraulic hose fittings and adapters

Domestic Suppliers in China
FAW Fawer
245 Shenzhen Street, Economic Development Zone, Changchun, Jilin, P. R. China
(86)0431-4659800, www.fawer.com.cn
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There are 23 manufacturing divisions/ companies under FAW Fawer Group.
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Dongfeng Motor Co., Ltd Parts & Components Business
8 dong Bin Gu Tai, Dong Cheng Road, Shiyan 442000, Hubei, P. R. China
(86)0719-8221934, www.dfap.com.cn
There are 17 manufacturing/companies under Dongfeng Motor Co. Ltd Parts & Components Business.
Wanxiang Group
Wanxiang Road, Xiao Shan District, Hangzhou, Zhejiang, P. R. China
(86)571-82832999, www.wanxiang.com.cn
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There are 8 manufacturing/companies under Wanxiang Group making auto parts and components.
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Sanhua Holding Group
Xinchang, Zhejing, P. R. China
(86)575-6222768, www.sanhuagroup.com
There are 7 companies under Sanhua holding group making auto parts.

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Designed to help those AMT members who are new to
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