June 1, 2005｜China
Dong Li Yan
Associate Researcher, Institute of Japanese Affairs, Jilin Province Institute of Social Sciences
Jilin Province is the center of the country’s automotive industry, which is vitally important. First Automotive Works Corp. has an important role in the promotion of China’s automotive industry as the cradle of the new Chinese car. After more than fifty years of development it has become one of the biggest such companies in the country, becoming a research and production base for modern automotive engineering which has the widest selection of products.
At the beginning of 2003, the value of production by the automotive industry in Jilin Province totaled RMB 125.06 billion, accounting for 51.5% of production by companies in the industrial sector across the province with total production in excess of RMB 5 million; by the end of 2003, the figure stood at RMB 371.34 billion. Of this, the total value of automotive industry assets was RMB 106.63 billion, accounting for 28.7% of the total.
Between 2000 and 2003, the number of cars produced in Jilin Province grew by 325,200 units, 390,800 units, 528,700 units and then 641,000 units, a rate of increase faster than the national average. The value of production in the automotive industry during this period totaled RMB 55.46 billion, RMB 74.45 billion, RMB 98.97 billion and RMB 125.06 billion in successive years, representing growth of 34.2%, 32.9% and 26.4% respectively; in all of these cases, growth was faster than the average for Jilin Province during the relevant years.
Between 2000 and 2003, the profit-earning ability of industrial companies with a size greater than the scale set by Jilin Province (i.e. earning at least RMB 5 million) was constantly increasing. Total profits in 2000 amounted to RMB 8.558 billion, followed by RMB 8.561 billion in 2001, RMB 9.98 billion in 2002, and RMB 15.72 billion in 2003. Of these figures, the automotive industry accounted for the greatest share, totaling RMB 3.941 billion (46.04%) in 2000, RMB 5.154 billion (60.02%) in 2001, and RMB 7.528 billion (75.43%) in 2002; in 2003, even amidst a situation in which industrial income across the province increased significantly, the car industry still earned RMB 9.74 billion (62%).
Currently, there are more than 300 automotive component companies in Jilin Province, 194 of which are bigger than the scale set by Jilin Province (i.e. earning at least RMB 5 million); total assets amount to RMB 17.26 billion. In 2003, total industrial production by companies bigger than the scale set by Jilin Province (i.e. earning at least RMB 5 million) reached RMB 17.16 billion, while profits amounted to RMB 1.24 billion; thus, these companies led the rapid development of the regional economy. In 2003, industrial production in Changchun totaled RMB 150.93 billion, of which the automotive industry accounted for RMB 118.18 billion, or 78.3%. Profits plus tax revenue from industry throughout the city amounted to RMB 19.41 billion, of which the automotive industry accounted for RMB 17.12 billion, or 88.2%. The total value of investment in the automotive industry in Jilin Province over the last two years was RMB 6-7 billion each year. The development of the automotive industry has also attracted investment from many foreign companies. In addition to the leading German company that was the first to settle in Jilin Province, more than 50 foreign car manufacturers have already invested in the construction of plants in Jilin Province to date, while a further 10 investment projects are currently under consideration. The Changchun Automotive Economic Trade Development Zone has already become one of the countryfs major hubs for automotive components, with 670 sales companies based there. In 2003, annual sales totaled RMB 16.5 billion, representing an increase of 5.1%; at present, there are 729 car repair companies in Changchun, providing many people with employment.
The pace of the development of the automotive industry in Jilin Province is rapid, but problems still remain: in general, the scale of the companies within it is small, research and development ability is weak, value added to products is low, reliance on plants at the main headquarters is strong, the cover mounting process is not organized and there is a lack of market competitiveness.