> Auto & motorcycle Industry

1. Development of Chongqing Auto Industry

(1) Basic Introduction

Since the "10 th Five-Year Plan", Chongqing auto industry has been making steady progress. The annual growth rate of output value is 19.36%, and the production and sales volume in 2000, 2001 and 2002 ranked the 4 th in the whole country respectively. Ford Motor Co., the world's second largest automobile manufacturing enterprise, and Changan Group set up a joint venture, Changan Ford Automobile Co., Ltd. in 2001, which specializes in production of economic cars and middle-and high-grade cars.

All together, there are 17 auto manufacturing enterprises, among which, there are 8 ones (to be entitled to produce chassis) specializing in manufacture of cars, microcars, light-duty trucks and heavy-duty trucks, namely Changan Automobile (Group) Co., Ltd., Chongqing Changan Ford Automobile Co., Ltd., Chongqing Changan Suzuki Automobile Co., Ltd., Qingling Motors (Group) Co., Ltd., Chongqing Heavy-duty Truck Group, Tiema Group, Chongqing Yuzhou Automobile Works and Beiquan Automobile Works; and 9 enterprises engaged in refitting automobiles and producing buses, tippers, crane cars, aerial lift vehicles and bullet-proof cars in Chongqing till the end of 2003. Now, Chongqing has a comprehensive annual production of 400,000 microcars, 150,000 cars, 70,000 light-duty trucks, 20,000 heavy-duty trucks and 15,000 refitted vehicles. Total assets of the industry reaches 58.2 billion yuan, net value of fixed assets 17.6 billion yuan and asset-liability ratio 59.7%.

In 2002, Chongqing achieved sales volume of 354,900 automobiles, accounting for 10.92% of the whole country, and sales income of 44.73 billion yuan, ranking the 4 th in the country. In particular, sales of Chongqing-made microcars accounted for 30% of the market share and ranked the 1 st in the country for successively 5 years since 1999. Production of microcar engines in 2002 was 322,000 sets, ranking the 1 st all over the country. Gross industrial output value of Chongqing auto industry achieved 57.57 billion yuan, accounting for 44.36% of the whole city; tax revenue was 2.47 billion yuan, accounting for 12.5% of the whole city; and the working staff exceeded 200,000, accounting for 3.7% of the whole city's urban working staff in 2002.

(2) Industrial Advantages

Chongqing has introduced technology of  SUZUKI microcars and cars, ISUZU commercial cars and Steyr heavy-duty trucks since the beginning of 1980es. In addition to the internationally famous brands like SUZUKI and Steyr, Changan, Qingling and Hongyan have become nationally famous brands. Changan Group has become the 4 th largest enterprise in auto production, and especially, production of microcars ranks the 1 st for successively 5 years. Chongqing Heavy-duty Truck Group also ranks the 4 th in production for years successively. Light-duty commercial cars manufactured by Qingling Group are famous for their high technological levels and quality. The market effects and scales results from earlier development advantages have laid a solid foundation for Chongqing being the 4 th largest auto manufacturing base of the country.

Chongqing, as an old industrial base, owns fairly complete manufacturing basis, so as to create favorable conditions for development of auto industry and form fairly complete component subcontracting system. Besides automobile manufacturing enterprises, there are subcontractors for key assemblies of automobiles in Chongqing and the products include engines, transmissions, front and rear axles, steering gears, braking systems, suspensions and body systems for heavy-duty, light-duty trucks and microcars. For example, Qingling has its own car body, engine, transmission, axle and brake subcontractors and Changan has its own car body, engine, transmission, brake, seat and heat exchange system subcontractors in Chongqing. According to the latest statistics, subcontracting rate of auto industry in Chongqing is 50% or so.

At present, a large number of key components like microcar transmissions manufactured by Qingshan Industrial Co., transmissions by Qijiang Gear Co., Hongyu brakes, Changfeng steering gears and Yuzhou gears become famous all over the country. Some component manufacturing enterprises in Chongqing have expanded their businesses throughout the country and a small number of products have entered global outsourcing system of the transnational companies. For example, Chongqing Chaoli Hi-Tech Industrial Co. specializing in automobile air conditioning are suppliers for FAW Jiabao, Xian Qinchuan, Shanghai Chery, Huayang Automobile, Nanya Microcar besides Changan; and Chongqing TSK Control Cable System Co., Ltd. are suppliers for Guangzhou Honda, Sichuan Toyota and US IILC in addition to Qingling.

C. Technical support and brand effect brought by multinational companies

Changan Automobile (Group) Co., Ltd., Qingling Motors (Group) Co., Ltd. and Chongqing Heavy-duty Truck Group, the three leading auto manufacturing enterprises in Chongqing , have established various cooperative relations with world famous auto manufacturing enterprises. SUZUKI Automobile Co. has made great contributions to microcars and economic cars, ISUZU commercial cars are internationally famous and Steyr owns technical advantages in domestic heavy-duty truck field. Especially, Ford's participation has made up the deficits in medium- and high-grade cars of Chongqing auto industry. Its famous brand greatly enhances reputation of Chongqing auto industry, expands market space and attracts many component manufacturing enterprises in other places to move to Chongqing . Cooperation with multinational companies facilitates auto manufacturing enterprises in Chongqing to enter the international markets and especially leads the way to entering global outsourcing system. Now the three auto enterprises are trying to strengthen and deepen cooperative relations in technical research and development and productive capacity with the international auto enterprises, just to maintain and expand the market share.

As a city with the most population in the world, Chongqing owns rich labor resources. As an old industrial base, there are a large number of technical personnel with high qualities in low labor cost, and also there are many scientific research institutes and colleges and universities like Chongqing University and Chongqing Industrial College , which establish automobile majors and can produce specialized talents for auto industry endlessly.

E. Establishment of privately-owned economy brings energy and strengthens competitiveness for the auto industry.

Chongqing has become the largest motorcycle manufacturing base. Some motorcycle manufacturing enterprises, which have accumulated capital in market competition and owned large production scale, have entered automobile industry by means of capital operation. Some other enterprises engaged in motorcycle manufacturing have entered auto component manufacturing industry and they have fairly strong cost control advantages and competitiveness and will bring infinite vitalities and competitiveness for the city's auto industry.

2. Development of Motorcycle Industry

(1) Basic Introduction

There are 19 motorcycle manufacturing enterprises, 10 engine manufacturing enterprises with production license (excluding affiliated enterprises) and over 400 component manufacturing enterprises with a certain scale in Chongqing motorcycle industry. Now the production capacity reaches 7 million motorcycles and 8 million engines.

Chongqing achieved a production of 3.887 million motorcycles (accounting for 30.1% of the country), an increase of 4.07% than that of last year; sales volume of 3.883 million motorcycles (accounting for 29.9% of the country), an increase of 3.03% than that of last year in 2002. Production and sales volume of Jialing Group still ranked the 1 st in the country with a production of 882,100 motorcycles and sales volume of 900,000 motorcycles; those of Lifan, Loncin, Zongshen and Jianshe ranked the 4 th, 5 th, 7 th and 10 th with sales volume of 714,000, 629,400, 601,500, 436,400 motorcycles respectively in 2002. The output volume of engines was 9.1169 million sets, and Lifan, Loncin, Zongshen and Jialing were the leading 4 engine manufacturing enterprises in the country.

According to incomplete statistics (from 11 motorcycle manufacturing enterprises), gross industrial output value (in constant price) in Chongqing motorcycle industry was 23.81 billion yuan (accounting for 41.3% of the auto industry), an increase of 0.66%; sales income was 1.81 million yuan, a growth of 9.65%; industrial added value was 3.063 billion yuan, an increase of 11.50%; and profit payments and tax turnover was 663 million yuan, a growth of 6.09%.

(2) Advantages

A. Capacity advantage --- the largest motorcycle manufacture and export base in the country

Chongqing has been taking the first place in motorcycle and engine production and sales, and in export all over the country for successively four years since 1999. Output accounted for 28.1% and sales volume accounted for 30.8% of the country in 2001; and those in 2002 were 30.1% and 29.9% respectively. In particular, the output of engines in 2000 accounted for 85.8% of the country and took a dominant place.

B. Enterprise advantage --- strong competitiveness in the leading enterprises

There are a number of motorcycle manufacturing enterprises with strong competitiveness and good fame at home and abroad in Chongqing . Among the leading 12 motorcycle enterprises of the country in 2002, Chongqing accounts for 5 namely Jialing , Lifan, Loncin, Zongshen and Jianshe. The total output of these 5 large enterprises accounted for 24.9% of the country both in 2001 and 2002. Among the 5 leading enterprises in Chongqing, Jialing Group Co. can produce 200 varieties of motorcycles with 8 different displacements, it has an annual capacity of 1.5 million motorcycles and "Jialing" trademark has become the most famous brand in China motorcycle industry; Jianshe Group Co. can produce over 270 varieties of motorcycles with an annual production of 1 million; Lifan Group Co. can produce 496 varieties of motorcycles and over 90 varieties of engines with an annual output of 1 million; Zongshen Group Co. can produce 150 varieties of motorcycles and over 20 kinds of engines with an annual yield of 1 million and Loncin Group Co. can produce over 100 varieties of motorcycles with an annual capacity of 1 million. "Loncin" is granted the title of the second "China Famous Brand" in the motorcycle industry.

In addition to develop domestically, Jialing, Jianshe, Lifan, Zongshen and Loncin have set up 16 motorcycle assembling plants by means of sole investment or joint investment overseas, among which, 13 plants locates in Asia, Columbia, Brazil and Benin till the end of 2001.Moreover, Jialing and Zongshen have established sales company in the U.S.A.

C. Subcontracting advantage --- strong processing and subcontracting capability

As an old industrial base, Chongqing owns fairly complete industrial system. Up to 1000 component enterprises in Chongqing are the basis for rapid development of Chongqing motorcycle industry. Gross industrial output value of component enterprises in 2001 reached nearly 10 billion yuan. Over 10 enterprises rank the first three places in the country and about 10 kinds of motorcycle components such as crankshafts and rocker arms produced in our city have entered outsourcing network of Japanese motorcycle enterprises. In 2001, enterprises ranking the 1 st in the same trade of China include: Lifan with a capacity of 1.84 million engines, Fuchai Industrial Co. with a capacity of 2.74 million cylinders and Changjiang Yizhimi Piston Co. with a capacity of 7.88 million pistons. In addition, Yunyang crankshaft, Zhicheng cylinder head, Jieli hub, Yujiang crankcase, Changan shock absorber, Qiutian main and counter shaft and clutch driving gear rank the 2 nd in the same trade of China . The component enterprises not only have strong subcontracting capabilities, which can receive order on the first day and delivery goods next day, but also have incomparable abilities in cooperation and coordination with main contractors.

D. Research and development basis advantage --- establishment of a number of motorcycle research and development institutions

Technical systems in Chongqing motorcycle industry include Honda system and YAMAHA system brought by joint ventures and the large leading enterprises have their own research and development institutions. Now, there are 5 technical centers, among which, there are 2 national ones ( Jialing and Jianshe) and 3 municipal ones ( Lifan, Zongshen and Loncin); and there are 2 postdoctoral working stations. Jialing, Zongshen and Loncin planned to invest 200 million yuan to establish research and development and checkout centers with nationally advanced technologies respectively and now over 100 million yuan have been invested.

Enterprises strengthen protection of intellectual property rights and actively apply for patent registration. Till Jan. 10, 2003, among the patents declared by the Municipal Intellectual Property Right Bureau, Jialing accounted for 108, Zongshen 266, Lifan 260, Loncin 217 and Jianshe 11.

In addition, Chongqing University , Chongqing Communications University and Chongqing Industrial College cultivate mountains of talents; and can conduct some basic theoretical research and tackle enterprises' technical difficulties. The scientific institutions like Chongqing Automobile Research Institute and Road Research Institute are able to launch auto design and experimental technical research.

E. Human resource advantage --- rich and low cost

A large number of workers and ordinary technicians have been cultivated in Chongqing for its old industrial history and they have become main force of motorcycle industry. Moreover, the colleges and universities in Chongqing have a great reserve of talents for motorcycle industry.