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Korean auto parts manufacturers need to develop the communication skills to promote their products overseas, Volkswagen¡¯s buyer Juergen Thiele recently told the Chosun Ilbo. Thiele, speaking at the Global Transportech 2008 in Changwon, South Gyeongsang Province, said while Korean auto parts makers have reliable technologies, they should be more aggressive in finding their way into overseas markets.
The Global Transportech 2008 and the Busan International Motor Show have drawn some 400 buyers from carmakers around the world. The former ended on May 1 and the latter opened the next day for an 11-day run until May 12.
¡ß Don¡¯t depend on domestic demand
Thiele¡¯s advice does not come out of the blue. Korean auto part manufacturers are realizing that Korean carmakers don¡¯t guarantee their business future anymore. Hyundai Motor and its sister company Kia Motors let their overseas plants buy parts from local suppliers. Other Korean automakers with foreign capital like GM Daewoo and Renault Samsung are turning to parts producers who will supply cheaper but good products in line with their foreign owners¡¯ global outsourcing strategies.
Thus Korean auto parts companies are increasing their supplies to foreign carmakers because they can achieve economy of scale and have a price edge when they attract more customers and sell more products. Here is a good example: A Korean auto component producer recently built a plant in Pune, India, to directly supply GM. Ko Moon-soo, the executive director at the Korea Auto Industries Coop. Association (KAICA) said, ¡°Korean auto parts companies don¡¯t depend on contracts with Korean carmakers anymore. They are participating in global competition, eyeing opportunities to win deals from foreign customers.¡±
¡ß Leading foreign carmakers interested
Volkswagen¡¯s Thiele advised Korean auto parts makers to look at European carmakers¡¯ moves to increase supplies by Korean suppliers while the euro is strong. Volkswagen bought auto parts worth W31.2 billion (US$1=W1,012) in 2006. The German carmaker plans to double that by 2010. With a strong euro and U.S. dollar this year, big American auto parts suppliers like Delphi and Visteon as well as European and Japanese automakers have sent dozens of staff to contact Korean auto parts makers directly. Nissan USA said Japan¡¯s Jatco, a supplier of transmissions to North America, will purchase components worth some W60 billion this year, up 60 percent from last year.
¡ß Need for marketing strategies
In Changwon and Busan, foreign buyers stressed the need for Korean auto parts manufacturers to increase direct supplies to foreign carmakers to survive stiff global competition. Ed Enns from the world¡¯s fourth largest auto parts maker Magna said the first thing the Korean firms should do is nurture staff who can predict what buyers want and meet the demand. He said Korean companies will enjoy abundant business opportunities if they become more active in tapping overseas markets with the current reliable technologies.
A buyer from Delphi, the largest auto parts supplier in the U.S., said a Korean company recently missed a business opportunity to supply a U.S. carmaker due to problems communicating in English. Some 30 buyers from Indian and Chinese carmakers visited the two events. A buyer from India¡¯s Mahindra said his company plans to increase purchases from Korea. The carmaker has purchased transmissions worth $5 million a year from Korea. But the buyer advised Korean firms to grow through mergers and acquisitions. Zhu Xu, a buyer from China¡¯s Changfeng Motor, said his company wants to work with a good Korean supplier, but communication is the biggest problem.
(englishnews@chosun.com )
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