If you want to find a business growth story, the best place for the Shanghai Auto Show is not the stand of the vehicle company, but the stand of the global parts supplier.
Of the suppliers I visited this week, two of them plan to double their sales within two to three years. Other companies also believe that they can maintain strong sales growth in the Chinese market for a long time.
In 2012, Valeo's sales in China exceeded 10 billion yuan (1.6 billion US dollars), accounting for 10% of its global sales. Valeo is expected to double its annual sales in China by 2015, when China will become its largest global market.
Another French supplier, Faurecia, expects sales in China to reach 3.3 billion euros (26.8 billion yuan) by 2016, more than doubling from 1.5 billion euros in 2012.
In 2012, 35% of TRW's revenue comes from the US market, and 15% of its revenue comes from the Chinese market. But company CEO JohnPlant said that by 2020, TRW's revenue in China will match that of the US market.
The German supplier Brose Group had sales of 760 million euros in China in 2012, an increase of 20%. In 2012, the company built two new factories to expand its production capacity in China.
The most frequent word used by global suppliers at auto shows is "growth," but you may wonder where their business growth drivers in China come from.
The main factor is the active expansion of its major customer, the global automaker.
For example, Faurecia has 90% of its revenue in the Chinese market from global automakers. The Volkswagen Group alone accounts for 40% of Foglia's business in China.
Volkswagen currently has two factories under construction in China. This month it announced that it will add seven final assembly plants. Between 2013 and 2018, it plans to increase its annual production capacity to 4 million vehicles, and the current production capacity will be 2.5 million vehicles.
Volkswagen is competing with GM for the status of China's largest light car manufacturer.
Last week GM announced plans to add four new assembly plants by 2015.
Given that Europe is in recession, other major emerging market economies (including Russia, India, and Brazil) also lack motivation, and multinational car companies are likely to increase their bets in the Chinese market.
For these global suppliers operating in the Chinese market, good time seems to have just begun.
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