China's automotive industry is in urgent need of a modernized industrial supply chain system that features safety, resilience, efficiency, and green development amid a transition from domestic competition to a global strategic layout, according to industry insiders.
Taking auto chips as an example. Data showed that domestically produced chips account for only about 20 percent of the components used in vehicles of Chinese brands. Besides, the sheer variety of chips complicates the manufacturing process.
"There are currently more than 1,000 types of chips used in the auto industry. We need to consider whether we can normalize these varieties, for instance, reducing them to 300 or 400 types so they can be used universally across the industry," said Li Bin, founder, chairman and CEO of Chinese automaker NIO.
Beyond efficiency, some industry insiders also stressed that supply chain modernization must strengthen suppliers' responsibility.
"In fact, we, as a tier-1 supplier, would provide a buffer for the automakers. And for the strategy of providing the buffer, whether it is through stockpiling inventory in advance or developing various alternatives to substitute tier-2 suppliers, I think it should be viewed as a system of risk-sharing," said Shen Shaojie, CEO of ZYT (Zhuoyu Technology), a Chinese autonomous driving supplier and service provider.
Another insider said the auto industry also faces significant challenges in the upstream supply of raw materials, as China currently has a high degree of external dependence on critical minerals, such as more than 60 percent for lithium and over 90 percent for nickel, which has posed a direct threat to the long-term stability of the supply chain.
"This can only be addressed by strengthening our strategic planning of raw materials and improving our national strategic reserve capacity. And we need to establish an early warning system at other times to address security issues from natural resource endowment of raw materials," said Zhang Yongwei, president of the China EV100, an electric vehicle industry think tank.
China's auto industry urges modern supply chain system amid global expansion push
