What are the benefits of a large number of auto parts companies going abroad?

I have recently participated in the Yuhuan Auto Parts Fair, Guangzhou AAG Auto Parts Fair, and this week's Wenzhou Auto Parts Fair. Recently, there have been quite a few auto parts exhibitions, including the previous Russian exhibition, next week's Frankfurt exhibition in Germany, as well as the Taizhou Auto Parts Fair, Yiwu Auto Parts Fair, and Ningbo Auto Parts Fair in September. In just 40-50 days, there are a total of 8 exhibitions. My feeling this year is that there are too many exhibitions.

However, it has been found that many companies participate in these exhibitions. Why is this?

The reason is also very simple, which is to seek a way out and increase exposure. Among these participating companies, the majority are engaged in foreign trade.

And to ask, why are there so many companies doing foreign trade? There are two reasons for this:

One is the problem of excessive competition in the domestic market: in fact, it is not only the serious competition in automotive parts, but also the entire industry chain from complete vehicles to maintenance and repair. Many companies are struggling to enter the domestic market, so they are seeking a way out through foreign trade.

The econd is the rise of China's automobile industry: In 2023, China's automobile exports reached 5.221 million units, a year-on-year increase of 57%, surpassing Japan's 4.42 million units and becoming the world's largest automobile export country. So car parts companies are taking advantage of this trend and starting to expand into overseas markets.

If I were to ask again, what are the benefits of so many auto parts companies going global?

In my personal opinion, in addition to macro narratives such as job creation and GDP growth, there are also two micro benefits:

One is to cultivate talents with a global perspective

At present, most of the world's top 100 automotive parts companies have their own factories or trading companies in China, but very few Chinese automotive parts companies can set up branches or offices abroad.

On the one hand, Chinese automotive parts companies started relatively late, and most of the vehicles that come with the main engine are domestic or joint venture cars, with few that can provide support for imported cars.

On the other hand, there is also a lack of international talent. In China, except for a small number of enterprises such as Huawei, Lenovo, and ByteDance, which have a large amount of investment and talent training in internationalization, most enterprises are mainly domestic. Even for companies like Alibaba, Baidu, and Tencent, their main source of income is in China. Although they have said they want to enter overseas markets, in reality, their investment and output overseas are not high. Therefore, most of these companies cultivate domestic talents, and many companies rely on their resource advantages in China to only thrive.

The same is true in the automotive aftermarket, where many top companies only operate horizontally. Although they have also expressed in the media that they want to start doing foreign trade, they only do import and export business and have no intention of setting up branches or factories abroad. The reason why they say this may be to tell investors or outsiders.

Nowadays, with so many companies starting to go global, it inevitably means that they will gradually cultivate talents with an international and global perspective.