The technological revolution and the rise of electric mobility have profoundly changed the global automotive landscape, with China positioning itself as a key market for French automotive suppliers. In 2023, the electric vehicle production capacity in the country exceeded 7 million units, a growing share of which concerns local brands, creating constraints and opportunities for French giants such as Valeo, Forvia, and OPmobility.
A strategic market penetration
For several years, French automotive suppliers have been seeking to establish themselves further in China, the world’s largest automotive market. According to the latest statistics, Valeo recorded a revenue of 16% from its activities in China in 2022, demonstrating the strategic importance of this market. The establishment of development and production centers in major cities like Shenzhen and Shanghai has allowed these companies to get closer to local players and tailor their offerings.
A concrete example is the joint venture between Plastic Omnium and Yanfeng, specializing in the production of bumpers for Tesla. This type of strategic alliance allows suppliers to not only benefit from local infrastructures but also to gain flexibility and in-depth market knowledge, while mitigating the risks associated with political uncertainty.
Innovation and local adaptation
To enhance their offerings, French suppliers have begun to innovate directly in the Chinese market. For example, Forvia, formed from the merger of Faurecia and Hella, has committed to developing green technologies tailored to the specific needs of Chinese consumers. In 2023, the proportion of Forvia’s sales made to local customers rose to 59%, a significant increase compared to the 18% observed in 2018. This dynamism legitimizes the repositioning of equipment and innovative solutions.
With an innovation-centered approach, suppliers have also started to develop products such as driving assistance systems and sensors specific to Chinese roads and users. Research and development in China are therefore crucial, as local consumer culture and customer expectations evolve rapidly.
Recommended strategies to gain influence
To strengthen their presence in China, French automotive suppliers should consider the following recommendations:
- Strengthen local partnerships: Subsidiaries should invest in strategic relationships with local companies to foster synergies and access a robust distribution network.
- Adapt products: Design products specifically responding to the preferences and needs of Chinese consumers, such as electrification technologies and sustainable mobility solutions.
- Increase commitment to R&D: Establish dedicated research centers in China to stimulate innovation and reduce time to market.
In conclusion, as the Chinese automotive sector continues to grow and modernize, French suppliers have the opportunity to consolidate their influence through adapted and responsive strategies. It is crucial that they invest in a deep understanding of market dynamics while cultivating strategic alliances and localizing their innovations to remain competitive.
FAQ on the influence of French automotive suppliers in China
Q: Why are French automotive suppliers interested in the Chinese market? French suppliers aim to strengthen their presence in a country that has become the world’s largest automotive market, thus providing significant business opportunities.
Q: How are French suppliers adapting to the Chinese market? They are establishing local teams and striving to develop innovations directly in China to meet market needs.
Q: What is Valeo’s strategy in China? Valeo has opened numerous production sites and increased its local workforce to better position itself against Chinese brands.
Q: What technologies are being developed by suppliers in China? The factories produce products ranging from electronic circuits to sensors, covering electrification and driving assistance systems.
Q: How is the competition between foreign and Chinese suppliers? Although Chinese suppliers are developing, foreign players like Valeo continue to benefit from a technological advantage that remains essential in the market.
Q: Do French suppliers face obstacles in China? Yes, some choose to ally with local companies through joint ventures to navigate the context of geopolitical tensions.
Q: How are French suppliers’ sales evolving in China? Performance is increasing, with a significant growth in sales, particularly for companies like Valeo, which saw its sales rise by 21%.
