Not made in China

Wu Liqun, a 36-year-old man, is a keen supporter of the domestic auto industry. He already has one Chinese-made car, and is considering buying a second, an SUV produced by Jiangling Motors Co in Jiangxi Province.

In his eyes, home-made cars are much cheaper than foreign or joint-venture ones. "I support national goods and the national industry," Wu said. "Also, they are of good quality."

Currently, he owns a Zhonghua car made by Brilliance Auto based in Liaoning Province.

What he didn't realize was that a lot of the auto parts used in its construction come from foreign firms, such as Bosch, a Germany-based automotive supplier.

The Zhonghua model is not unique in this regard. The EC7, a luxury model made by Geely, uses parts made by Bosch, Siemens, and Delphi.

China may have the largest auto market in the world, but domestic auto parts producers only have a 20 percent share of the market. Among them, 90 percent of their products are used by low end models.

Foreign firms pile in

On February 14, Bosch broke ground on a new plant for its chassis control systems division in Chengdu, Sichuan Province.

It will be the second of its kind in China, following the one opened by the company in Suzhou, Jiangsu Province. The new project is part of Bosch's strategy of increasing its investment in the western and central regions of China.

According to the plan, a total investment of $137 million will be put into the site, and it is expected to reach an annual production capacity of 1.4 million ABS/ESP systems as well as 19 million wheel speed sensors after its completion in 2013.

"Bosch is strengthening its 'Go West' strategy," Uwe Raschke, a member of the board of Bosch, said in Chengdu, noting the plant will serve more than 60 clients, over half of whom are domestic car producers.

According to Raschke, China is the company's third largest market after Germany and the US. "Asia Pacific's emerging economies will maintain our rapid growth - especially China, with its top-flight growth momentum."

In November last year, major Japanese auto components supplier Aisin Seiki Co said that it had established manufacturing companies in Guangdong and Jiangsu provinces to beef up its local production capacity in line with Japanese automakers' production expansion there.

According to a report released by research company Alix Partners last year, auto parts suppliers make more profit in China than in other countries, with average profit margins of 10 percent in 2010.

No room at the table

Gao Shufeng, a member of the marketing staff with Shandong Gold Phoenix Group, the largest brake pad producer in China, told the Global Times that their domestic clients are only home-made producers such as Geely and some low-end joint-venture brands, such as FAW-Volkswagen Jetta. "We cannot reach the foreign brands," said Gao.

"Even though we offer low prices and good quality, and our products are accepted by vehicle producers, the brake producers are reluctant to use our products," Gao said. "Some producers have a fixed supply chain, and they do not like it to be broken by outsiders. Only if their profits are low would they shift to domestically made parts."

According to Gao, their prices are between 30 and 50 percent lower than those of foreign products, but only 15 percent of the company's sales are in the domestic market.

"Home-made brands cannot expand their market," Jia Xinguang, an independent auto analyst, told the Global Times.

"Even some domestic car firms prefer to use parts from joint ventures, instead of home-made auto parts."

In a blue paper released jointly by Volkswagen China, the Development Research Center of the State Council and the Society of Automotive Engineers of China, core auto products - such as fuel injection systems, engine management systems and ABS braking systems - are nearly all produced by foreign-funded enterprises.

Imbalanced development

Industry insiders say that the government has paid far greater attention to boosting the car manufacturing industry, rather than auto parts development. "The government does not have any policies to develop the auto parts industry in its national five-year plans," said analyst Jia. "After entering the WTO, the government did not put in place any share-holding restrictions for auto parts companies. Only vehicle producers were not allowed to have shares greater than 50 percent in local firms."

"The government sacrificed the auto parts industry to save vehicle production."

Insiders also said that in other countries, the amount of investment in auto parts is as much as double the investment in car manufacturing. But the investment in auto parts in China is much lower.

According to the China Automotive Industry Yearbook, between 1986 and 2009, the total investment in auto parts was 200 billion yuan, out of total investment of 758 billion yuan in the auto industry, or just 26 percent.

As a result, the industry has had a hard time in developing. "The quality and technology of home-made auto parts is not strong as those from foreign producers," Wu Shuocheng, an editor from gasgoo.com, an auto portal, told the Global Times.

Gao from Shandong Gold Phoenix Group admitted that a lack of high technology and brand heritage are big obstacles for them. "We have investment, we have R&D, but our brand is not as old as the foreign ones. Also, some car producers, such as those from Japan and South Korea, give priority to auto parts from their countries," said Gao.

In December last year, the Ministry of Industry and Information Technology and other ministries announced guidance for overseas investment, including encouraging foreign and joint-venture car companies in China to focus more on auto parts production and R&D.

However, in a survey by gasgoo.com, 49 percent of those polled said the guidance will make overseas companies develop their auto parts even more in China and do further damage to the local industry.

Nonetheless, home-grown producers are still optimistic about the market. "In the past, we exported most of our products overseas. But we are trying to explore the domestic market more, as it is becoming more orderly and the cake is huge," said Gao from Shandong Gold Phoenix Group.

Also, there will always be patriots like Wu. "Home-made cars will still be my first choice, whether they use home-made auto parts or not," said Wu.