Japanese vehicle makers are bringing in their network of parts and component suppliers as sales grow
One of the secrets of the Japanese car-manufacturing miracle since 1945 is the keiretsu system - close relations between manufacturers and the firms that supply them with parts and components.
Now that the Japanese car giants are finally moving into China, they are bringing their suppliers with them and replicating the keiretsu system. Following the carmakers, more than 300 Japanese producers of parts and components have set up plants in China, through wholly owned or joint ventures, and account for 5 to 10 per cent of the market, according to industry estimates.
As the market share of Japanese cars increases, the share held by their suppliers will also rise. They are also aiming to become leading suppliers to the other foreign joint ventures that account for the bulk of China's car industry, at the expense of domestic suppliers, which are years behind in technology and expertise.
Some analysts fear that Japan's exclusionary maker-supplier relationships could lead to accusations of unfair business practices, such as those that United States makers have levelled at Japan.
The car-parts market is one of the most hotly contested in China, with the Japanese players joining European, US and domestic competitors.