In 2003, the sales revenue of China's auto parts industry reached US$36 billion dollars, accounting for 1/3 of the sales volume of the entire auto industry that year. Foreign brands dominated the market, especially for products with higher technological content such as steering gear, advanced braking systems, transducers and other electronic components.


China is now home to almost 5,000 auto parts manufacturers, of which more than 1,200 are foreign invested. Total foreign investment for WOFEs and JVs in the auto parts industry now exceeds US$10 billion. The Chinese government has also invested heavily in the industry, to the tune of US$6.84 billion over the last 20 years, half in just the last 5 years.  Large auto parts production bases have taken shape in northeast Liaoning Province, Shanghai, and central Hubei Province. The industry is highly fragmented with 60 companies producing 45% of the output.



Among the dozens of foreign players in China, Delphi, a US-based company, is the largest, employing more than 7,000 people in China in 14 manufacturing facilities. Total cumulative investment in China now stands at around US$450 million and China sales at US$850 million in 2003. Pressures from automotive customers have played a strong role in this migration. Since arriving in China in 1985, Volkswagen has attracted more than 100 of its international suppliers to China. General Motors has attracted at least 44 with total cumulative investment in China said to top US$2.2 billion. As a consequence of sourcing more parts from China for both China-based and global production, international automakers are increasingly using Chinese-made parts as benchmarks for quality and price.



Currently, auto parts and accessories enjoy lower tariff levels than cars although both are falling precipitously. China has agreed to lower tariffs on imported auto parts and accessories to 10% over a period of five years from the WTO accession date (December 2006).



China exported US$6.5 billion worth of auto parts in 2003, a 210% increase over 2002.

Exports to US were US$2.8 billion in 2003, up 32% from 2002 and more than double the 2000 level. Imports into China also rocketed by 111.71 percent to US$6.26 billion during 2003. The number of auto engines imported in 2003 alone amounted to 374,000, a jump of 146 percent over 2002. US exports of auto parts to China were US$510 million in 2003.