With the combined trends of growth in China’s auto sector and industry migration to western China, interest is set to peak at the Auto Chongqing 2010 exhibition during June. Driven by the continued growth of local hero Chongqing ChangAn the development of the region’s auto industry is presenting opportunities for local and foreign players to enter the market for auto parts and car production.
Competing to Be the Detroit of China
While many foreign investors and industry experts are familiar with the development of China’s auto industry in Shanghai’s Anting District, cars are also a pillar of Chongqing’s economy. According to city government statistics from 2006, Chongqing’s automobile industry (including vehicles and parts) realized a value of RMB 133.1 billion, an increase of 35.4% compared same period in the previous year and accounting for 31.7% of the city’s total GDP. During the same period, the sector produced 791,000 vehicles (including motorcycles), which amounts to an increase of 17.3% compared to the same period during the previous year. Sales volume during the period was 789,000 units – an increase of 14.9%. As a percentage of the total output of China’s auto industry, Chongqing’s output accounted for 11% which makes the city the fourth largest producer of automobiles in the country.
The range of vehicles produced in Chongqing runs from simple motorcycles, to modern passenger cars, to heavy industrial vehicles.
Missing Out on Hummer
Perhaps the greatest publicity for Chongqing’s auto industry has come from one of it’s failures – the now abandoned bid by Sichuan Tengzhong Heavy Industrial Machinery Corp to purchase the Hummer brand of sports utility vehicles from General Motors of the US. While the proposed sale was officially pronounced dead by GM during February 2010, the nearly one year of media attention that the attempted purchase of the iconic brand brought to Chongqing has done much to highlight the ascendance of Chongqing’s auto industry as a national, if not quite yet international, player.
ChangAn Dominates the Market
Despite the attention that Tengzhong seized during the last year, the industry in Chongqing is still very much dominated by ChangAn. Long known for the inexpensive minivans that are the ubiquitous choice of delivery companies and small businesses across the country, the company is active in all vehicle sectors in the city.
In February this year the company announced plans to raise as much as RMB 4 billion through a public stock offering to update its small vehicle technology and improve its in-house R&D. While the sale has yet to be implemented, the prospect of the growth that this extra spending could drive has many enterprises scrambling to secure contracts to supply components and services for ChangAn’s impending expansion.
| Mini-car manufacturers | ChangAn Group, Dongfeng Yu An |
| Car manufacturers | ChangAn Group, ChangAn Ford Mazda, ChangAn Suzuki, LiFan Automobile |
| Bus manufacturers | HengTong, AnKai, ChuangJiang |
| Commercial Vehicles | Iveco, Chang Kua Yue, QingLing, Chongqing Heavy Vehicle Group, Tiema Group, Chongqing Tengzhong Heavy Industrial Machinery Corporation |
| Special Purpose Vehicles | Dima, JinGuan, NaiDe |
Goals for the Future
While the industry has already taken significant strides, it is not only ChangAn that has big plans for the future. According to statistics from the Chongqing Foreign Trade and Economic Relations Commission, by the end of this year the sales volume of cars and motorcycles produced in Chongqing will reach 1,500,000 units, including 1,200,000 passenger cars. This production is estimated to account for 15% of the nation’s total output for the year. Total revenue from these sales are expected to reach RMB 135 billion.
Further down the road, by 2020 vehicle production is expected to reach 2,600,000 units, generating revenue of RMB 200 billion. Beyond increasing production, the government has also put in place incentives which are encouraging producers to enhance their research and development of new technology, particularly in the areas of clean energy and energy efficient vehicles. The overall goal is to attain an industry that can rely 80% on domestically developed technology.
In 2006 the city had 261 sized auto parts enterprises (with annual sales revenue over RMB 5mln). of which 42 enterprises generated sales revenue over RMB 100 million. and more than 200 enterprises obtained TS16949 Certification. The production volume of 28 species of automobile parts such as camshafts, transmission, bearings and brakes ranked among the top three across the country.
Active Foreign Investment
As the local auto industry has grown, many international industry leaders have set up production in the area. According to figures from the Chongqing government, paid-up foreign direct investment in the city’s auto industry already totals more than RMB 7 billion.
Among the auto part manufacturers who have already established operations in Chongqing are Visteon, TRW, Johnson Controls, LEAR, Delphi and Cummins from the US; DENSO and Exedy from Japan; and Mahler, Siemens VDO, GKN, and GITI from Europe. The products from these companies are not only supplying the domestic market, but also are producing for export worldwide.
Where the Leading Players Are
As one of China’s four provincial-level metropolises (along with Shanghai, Beijing, Tianjin) Chongqing covers an area of more than 82,300 square kilometres and is officially home to more than 28 million people. So just setting up in Chongqing does not guarantee that your company will be in close proximity to your suppliers or customers.
For the automotive sector, there are a number of areas around the city which have become home to important industry clusters.
Northern Chongqing
Taking the automobile industry town in the Northern New Area as the centre, it is driven by the complete vehicle enterprises such as the ChangAn Group, the Heavy Vehicle Group, LiFan cars, AnKai bus and the Chongqing Bus corporation, and supported by the auto parts enterprises including ChaoLi Electric, Yujiang Die Casting, Qinchuan Electromechanical, Johnson YanFeng, YanFeng Visteon, ChangAn Lear, TSK Cable, Teleflex auto parts, ZhongYi shock absorbers, Qijiang Gear, UAES and Caff vehicle acessories. It mainly covers part of Jiangbei District, the Airport Industrial Park, and part of the Northern New Area Economic Development Zone. The northern industry complex is one of he largest industrial clusters in Chongqing Municipality, and has formed a 10-kilometer “Auto Town” integrating automobile production, research and development, trade and tourism functions. It is the center of the future automobile industry in Chongqing.
Leading Industrial Zones in Northern Chongqing
Chongqing Northern New District Industrial Zone
Although it is the newest district in Chongqing, Chongqing New North Zone (CNNZ) plays a leading role in the city’s auto industry. Since it was established in 2003 this 135 square kilometre economic and technological development zone is rapidly becoming a centre for modern industry. The zone emphasises building a new community based around high tech industry and modern infrastructure.
Industries Encouraged
Automobile Production/Assembly, Biotechnology/Pharmaceuticals, Electronics Assembly & Manufacturing, Heavy Industry, Instruments & Industrial Equipment Production, Medical Equipment and Supplies
Chongqing Tongliang Industrial Park
Another relative newcomer, Chongqing Tongliang Industrial Park was approved and established by the Chongqing Municipal Government in 2002 as a municipal-level development zone. The park is located in Tongliang County, which is situated in the northwest of Chongqing. Tongliang County, 41 km and 65 km away from Chongqing’s downtown areas and Jiangbei International Airport respectively. The park is served by both the Chongqing-Suining Freeway and China National Highway 319 which traverse the county from east to west.
Industries Encouraged
Automobile Production/Assembly, Building/Construction Materials, Electronics Assembly & Manufacturing, Food/Beverage Processing, Garment and Textiles Production, Heavy Industry, Instruments & Industrial Equipment Production, Medical Equipment and Supplies
Western Chongqing
As home to Qingling, Tiema and other vehicle producers, western Chongqing has also attracted important auto part and component suppliers such as Cummins, Mahler Piston, Loncin, JiaLing, JianShe, HuanSong, JinGuan Technology,, YuAn, and Chongqing Fuel Injection Equipment. The area includes Jiulong Industrial Park and Shapingba District. Dominant auto-related sectors in the area include the production of light trucks, heavy-duty trucks and auto parts.
Leading Industrial Zones in Western Chongqing
Chongqing Jiulong Industrial Zone
Jiulong Industrial Zone has established automobiles, motorcycles, precision machinery, modern printing, new materials, IT, steel and stone processing as its major industries. Approximately 400 enterprises have already been established in the zone, including large international companies such as Yamaha, BMW, Black & Decker, ABB and Tsubaki.
The motorcycle manufacturer Chongqing Loncin Industrial Group, has announced plans to launch a RMB 5.2 billion joint venture with BMW to build an engine producing facility in Chongqing Jiulong Industrial Zone. The facility is expected to commence operations in 2013, and realize an annual industrial output of RMB 13 billion.
Industries Encouraged
Electronics Assembly & Manufacturing, Automobile Production/Assembly, Food/Beverage Processing, Instruments & Industrial Equipment Production, Raw Material Processing, Heavy Industry
Chongqing Shuangqiao Industrial Zone
This industrial zone in western Chongqing specialises in heavy-duty vehicle and auto parts manufacturing. Major manufacturers in Shuangqiao Industrial Zone include Chongqing Yunhe Automobile Manufacturing Co. which has invested RMB 140 million in for a heavy-vehicle and auto parts facility. The zone is also home too Double Coin Holdings RMB 3 billion tire production facility. To date the zone has attracted more than forty companies who have established more than 60 facilities.
Industries Encouraged
Electronics Assembly & Manufacturing, Chemicals Production and Processing, Automobile Production/Assembly, Instruments & Industrial Equipment Production, Heavy Industry
Southern Chongqing
Development of the auto industry in southern Chongqing has been driven by enterprises such as ChangAn Suzuki, and DaJiang Group and the vehicle modification company DIMA. In addition, the area has attracted parts suppliers such as ZongShen, Taiwan Toyo, ChangJiang Electric and other famous brands. The area consists of Ba’Nan District, part of both NanAn Economic Development Zone, and ChaYuan New Area.
Chongqing Chayuan Industrial Zone
Situated in Nan’an District, between the first ring road and the second ring road of the city, Chongqing Chayuan Industrial Zone is 12 km away from Chongqing Railway station, 32 km from Jiangbei International Airport and 15 km from the container terminal. The zone has established electronic information and equipment manufacturing as its pillar industries. Currently, there are approximately 100 enterprises in total located in the park including Chongqing Chongyou Information Technology (Group) and Chongqing Dima Industry.
Chongqing Dima Industry specialises in manufacturing high-tech specialized vehicles and achieved sales revenues and net profits of RMB 692 million and 105 million respectively in 2007. The company ranks among the top 50 industrial enterprises in Chongqing.
Industries Encouraged
Automobile Production/Assembly, Electronics Assembly & Manufacturing, Heavy Industry, Medical Equipment and Supplies, Telecommunications Equipment
Outlook For the Future
With all of this activity around Chongqing’s auto industry there is certain to be a lot of activity at Auto Chongqing 2010 and even more action for the city’s automotive enterprises.
Special thanks goes to Maxxelli Real Estate of Chongqing for providing extensive research for the story. You may find out more about Maxxelli and about opportunities in Chongqing’s industrial real estate industry at www.maxxelli.net
