Automobile & Parts

 

1 Introduction to the Project
1.1 Project Background
1.1.1 P roduct Introduction
The product of this project is aluminium alloy hub, which has the advantages of fast heat dissipation, good damping property, and long service life of tyre, safety, reliability, beautiful appearance, colorful patterns, precise dimension and good balance, about 2kg on average lighter than steel hub. When the travel speed is 60km/h, it can save oil 5%-7%, having huge development potential.
1.1.2 Market Prospects
(1) Domestic and Foreign Market Status
In the previous 12 years, aluminium automobile hubs in North America have soared at the fastest speed. The number of aluminum wheel produced in America was 15.61 million in 2014, accounting for 55% of that of the North America while the consumption was over 50 million. Thus, a large number of aluminum wheels are imported to America from Asian region to meet the need of domestic market. The aluminum wheel produced by Chinese enterprises has high quality, reasonable prize and is highly marketable which to some extent has a influence on the interests of domestic manufacturer in America and is the main reason that leads to relevant trade frictions during recent years.
The world annual output of automobile aluminium alloy hubs is about 100 million. By 2014, the demand for aluminium alloy hubs reach about 250 million. The tremendous attraction of the international aluminium alloy hubs market stimulate further development of aluminium alloy hubs industry. The demand for aluminium hubs in the international market has been optimistic, domestic main production  manufacturers have regarded the international market as key target market for development. By taking America as main export market, annual demand for aluminium alloy hubs has exceeded 50 million; followed by Japan and Germany, with annual demand for aluminium alloy hubs has exceeded 30 million.
Domestic aluminium wheel market is mainly centralized in Shanghai Volkswagen, FAW Volkswagen, Guangzhou Honda and several mini-car plants and Pickup plants, mostly supporting for automobile plants. According to the vehicle type, advanced cars (Audi A6), intermediate cars (Accord, Passat), low-level cars (ordinary Santana, Jetta, Xiali and Fukang) as well as minivan, Pickup, medium-van and jeep have been widely equipped with aluminium alloy wheels. At present, Chinese people have been familiar with aluminium wheel as well as its advantages. With the growth of Chinese automobile output, the demand for aluminium alloy wheels will become bigger and bigger.
(2) Market Demand
In 2015, domestic car output is 15 million. Calculating on 70% utilization rate of aluminium alloy hubs, each automobile needs 5 hubs (including spare tyres), and annual demand for aluminium alloy hubs is 31.5 million. It is estimated according to the output of 10 million cars per year in the coming 5 years, annual demand for aluminium alloy hubs will be 35 million. Chinese automobile inventory is substantially increasing. In 2015, Chinese car inventory was 48 million. Calculating on Chinese automobile inventory in 2015 as base number and 20% annual maintenance and replace rate of aluminium alloy hubs, annual demand for aluminium alloy hubs will be 32 million.
(3) Horizontal competition situation
At present, China has 80 aluminium alloy hubs manufacturers, in which 9 manufacturers with production scale more than 2 million, including CITIC Dicastal Hubs Manufacturing Co., Ltd., Kunshan Liufeng Machinery Industry Co., Ltd., Nanhai Zhongnan Aluminium Alloy Hubs Co., Ltd., Xiamen Minxing Metal Products Co., Ltd., Shanghai Guoxing Metal Product Co., Ltd., Yuanqing Aluminium Alloy Hub Co., Ltd. The production capacity of the remaining 70 enterprises is about 200,000 hubs. Annual supply of aluminium alloy hubs in Chinese market is about 32.2 million, and annual demand is about 67 million, having big market gap.
(4) Target market - FAW supporting
Automobile supporting rate of FAW in the province only accounts for 38% of domestic supporting share. According to the general international situation, local automobile supporting rate should be around 70%. Therefore, automobile accessory enterprises of Jilin Province still have big supporting space for FAW Group. In 2015, in the deep domestic chemical industry meeting for automobile parts in Jilin Province, FAW indicated to purchase 50% of domestic products in the province. Moreover, the Xu Jianyi, the company’s president and secretary of Party Committee, proposed in 2011 Purchase Working Conference of FAW Group: "during the Twelfth Five-Year Plan", FAW will continue engage in enhancing core supplier system construction, follow the FAW brand strategy of "quality, technology and innovation", start with resource integration, information sharing, scale purchase and other key links, deepen and strategic collaboration with suppliers, incessantly improve the operation mode of supply chain through technical innovation and management innovation, realize the transformation from extensive labor force and resource price advantage to intensive technology and management advantage, further increase rapid response and operation efficiency of supply chain, reduce cost, and gradually build a powerful supply chain system that is changed according to the demand, driven by customers, with risk and interest sharing. It is thus clear that, FAW Group has very close collaboration with broad automobile parts suppliers, providing favorable development conditions for this project construction.
1.1.3 Technical Analysis
(1) Main production process flow is: smelting→low pressure casting →spinning →X-ray flaw detection→heat treatment→machining→dynamic balance inspection→gas tightness inspection→coating.
(2) This project adopts advanced low pressure casting and spinning techniques to produce aluminium alloy hub, which has high strength, abrasion resistance and other features.
1.1.4 A dvantageous Conditions of Project Construction
(1) Policy conditions advantage
The State's Twelfth Five-Year Plan specifies to list automobile manufacturing industry as one of five major pillar industries of Chinese national economy, and vigorously develop light automobiles; in the Twelfth Five-Year Plan, Jilin Province also proposed definite goal: "accelerate the construction of automobile industrial park of Changchun, Jilin, focus on Jiefang, Besturn and Hongqi series energy-saving automobiles with independent brands and small displacement, increase the production capacity of independent brand cars, heavy and medium trucks as well as mini and light cars, and implement automobile energy expansion project of 3 million automobiles in Changchun City and 1 million automobiles in Jilin City. By 2015, the capacity of complete automobiles of the province will reach 4 million, and additional value of automobile industry will reach RMB200 billion", providing macroscopic support for the development of automobile accessory industry. In addition, Baicheng automobile industry has good foundation, and the government can implement “one discussion for one case” investment promotion policy for the enterprises invest in automobile accessory industry.
(3) Technical talent advantage
The manpower required for the project construction in the local area can be recruited in the local area. At present, Baicheng City has a population about 2.03 million, including about 1.2 million within the labor age; 510,000 population in the city center and the surrounding areas, including about 290,000 population within labor age. Now the workers without skill can only get lower salary in Baicheng City, average monthly salary is about RMB900-1,000; average monthly salary of intermediate technicians in the industrial enterprise is RMB1,500-2,000 (excluding insurances). Baicheng City popularizes middle school education, and the entrance rate of high school exceeds 75%, and the education cause develops quickly. Over 10 universities and secondary vocational schools located in the urban area, including Baicheng Normal College, Baicheng Vocational Technical College and Baicheng Technician College, can provide large amount of graduates who prepare to select jobs every year. Baicheng Technician College has set up professional classes concerning electronic technique, computer application, machining, mold design and processing and numerical control, which can cultivate professional technicians for the local enterprises. In addition, over 30 worldwide well-known colleges and universities in the province including Jilin University and Changchun University of Technology have a multitude of experts and scholars of machinery and electronics majors. Changchun Institute of Physics, Jilin Mechanical and Electronic Design Institute and other units provide powerful and very helpful technical support for the project construction; graduates, masters and doctoral students graduated from universities every year also provide selection space for this project to select high-level management talents.
(4) Raw materials resource advantage
The hubs produced in this project production can be directly supplied for FAW and other large-scale car production enterprises. At present, Baicheng City is negotiating with 400,000t/year Electrolytic Aluminium Project with Aluminium Corporation of China, This project construction can provide large quantity of raw materials for this project. The project location has abundant power energy that needs to be consumed locally.
(5) Good infrastructure condition
Infrastructure condition: The public utilities in the periphery of this project site are complete, having "seven accesses and one leveling" infrastructure condition. Good external supporting facilities will lay a solid foundation for the project construction and save construction investment.
(6) Transportation condition advantage
Logistical condition: Baicheng is at the junction of Jilin, Heilongjiang and Inner Mongolia, where is the only way must be passed from west of Heilongjiang and east of Inner Mongolia for entering the door, the fourth Eurasia Bridge planned by the United Nations Development Programme, and the important nodal city of the State's "Changchun-Jilin-Tumen" planning spindle, "Sino-Mongolia Big Channel" and 5-vertical and 3-horizontal logistical channel in Logistical Development Plan in Northeast Regions. The railways and highways extend in all directions, the waterway can directly reach Khabarovsk Port of Russia via Harbin from Da'an Port. Three-dimensional traffic transportation network consisted of railway, highway and airplane pass through in four directions. Baicheng has become the hub center of regional channel.
1.1.5 Necessity of Project Construction
(1) Aluminium alloy hubs project construction is very necessary for producing energy-saving and safe automobiles.
Compared with steel hub, aluminium alloy hub has better performance. Automobile lightening design is the current trend. Increasing the application proportion in light alloy (aluminium, magnesium, etc.) in automobile components is one of the important means for lightening the automobile. Therefore, the first advantage of aluminium alloy hub is light mass. The advantage of light mass is obvious: fuel utilization rate, automobile speed and brake performance have been increased. The second advantage is fast heat dissipation. Fast running automobile tyres have friction, braking and acceleration with the ground and cause high temperature, if heat dissipation is poor, resulting in heat accumulation, it is easy to produce flat tyre at high temperature, brake weakening or even dysfunction. Due to coefficient of heat transfer and structural features, aluminium alloy hub enables the heat dissipation efficiency to be multiplied compared with steel ring, thus reducing the aging speed of brake system and tyre as well as the probability of flat tyre at high temperature and dysfunction high temperature arising from long-time braking, very helpful for increasing driving safety. The third advantage is damping property. The damping performance of light alloy is much better than that of steel, good damping will ensure stable and safe driving. In conclusion, installation of aluminium alloy hub is the best choice for producing energy-saving and safe cars.
(2) The construction of aluminium alloy hubs project is very necessary for promoting centralized development of domestic wheel industry.
The production concentration ratio of domestic wheel industry is relatively low, the quantity of manufacturers of products in the same category is 5-6 times of the developed countries, and output is only 1/10 of theirs. At present, among more than 80 domestic aluminium hub manufacturers, only 9 manufacturers have annual output of over 2 million and certain scale and stable market. Several enterprises with large scale and strong strength divided up domestic complete automobile supporting market, and some top enterprises exported to major international market, most of manufacturers mainly supply for domestic and foreign retail market; the second is low production supporting rate. The supporting rate of Chinese wheel enterprises is 54%, and generally over 80% in developed countries. The whole industry is in a dispersed, messy and poor state, and the industrial concentration ratio is very low. At the moment, reaching an cooperative production agreement with Changchun FAW Company to constructing 10 Million Pieces/Year Aluminium Alloy Hubs Project has positive significance for promoting the centralized development of domestic wheel industry.
(3) Aluminium alloy hubs project can powerfully boost the coordinated development of automobile industry supporting in Jilin.
Big enterprises and big groups have outstanding advantages in scale, management, capital, technology, talent and brand, having strong innovation ability and sustainable development ability, greatly driving and radiating the industrial development, and occupying a decisive position in economic development. Tightly grasping the opportunity that Changchun FAW Group wants to construct "strategic alliance of supply chain", taking effective measures according to the progress requirement for automobile part industry of Baicheng Economic Development Zone, supporting and cultivating, and making a batch of automobile complete automobile supporting projects with strategic significance stronger and bigger can cultivate local tax source enterprises, increase fiscal taxation, and promote the leading enterprises in the province to develop more quickly, strengthen the overall economic strengthen of Jilin Province, and facilitate the industry of Jilin to revitalize comprehensively.
1.2 Content and Scale of Project Construction
1.2.1 P roduct Scheme and Scale
The construction scale of this project is 2 million aluminium hubs per year.
1.2.2 Construction Content
The project covers an area of 100,000m2, including building area 68,300m2, 66 sets of equipment have been purchased.
1.3 Total Investment of the Project and Capital Raising
1.3.1 Total Investment of the Project (see Table 1)
Table 1: Summary Table of Total Investment of the Project   Unit: RMB10,000

No.
Expense Name
Amount of Investment
Proportion of Total Investment %
Remarks
1
Construction investment
35000
87.5
 
2
Interest incurred during construction
 
 
 
3
Circulating capital
5000
12.5
 
4
Total Investment of the Project (1+2+3)
40000
100
 

Note: "RMB10,000" in the Table shall be RMB.
1.3.2 Capital Raising
It is raised by the enterprise independently, and debt capital and interest are not considered in the estimate of total investment.
1.4 Forecast of Economic and Social Benefits
1.4.1 Indexes for Forecast of Economic Benefits (see Table 2)
Table 2: List of Major Indexes for Forecast of Economic Benefits

No.
Name
Unit
Index
Remarks
1
Business income
RMB10,000/year
70000
Normal year
2
Total profit
RMB10,000/year
11000
Normal year
3
FIRR of all investments
%
18.6
After income tax
4
Period for recovery of all investments (after tax)
Year
6
Including 2 years of construction period
5
ROI
%
20.63
Normal year after tax

Note: "RMB10,000" in the Table shall be RMB.
1.4.2 A nalysis of Social Benefits
The aluminium alloy wheels produced by casting and spinning in this project can obviously reduce the weight of wheel, thus reducing the investment in raw materials and saving raw material. This technique occupies the leading position in China. The construction of this project can drive the local economic development and increase jobs for 5,000 persons.
1.5 Cooperative Ways of the Project : Sole proprietorship
1.6 Construction Site of the Project : Baicheng Economic Development Zone
1.7 The On-going Condition of Project : Project Cooperation Plan has been prepared
2. Introduction to Partner
2.1 Basic Conditions
Name: Management Committee, Baicheng Economic Development Zone, Jilin Province
Address: Room 1009, Kaifa Building, No. 88, Xingfu South Street, Baicheng City
Legal representative: Liu Fubiao
2.2 Overview
Baicheng Economic Development Zone is the provincial-level economic development zone, close to downtown of Baicheng City, at the junction of Jilin, Heilongjiang and Inner Mongolia provinces (regions). The regional area is 171km2. Total output value of the zone in 2011 is RMB2.4 billion, full-aperture financial income is RMB530 million, comprehensively ranking the 20th among 44 development zones in the province. Through over a decade of development, a host of enterprises in and out of the province, including American Delphi, CPI Financial Co., Ltd., Jinshida Electric Co., Ltd., Zhongyi Precision Forging, Tongye Machinery, Siji Shengbao, Jinshi Industry and Trade and SINOPHARM Group, have successively entered the zone and invested to construct new projects. The Development Zone has appeared a good situation of joint progress of four major leading industries including automobile accessories, coal and electricity, textile and medicine. During the Twelfth Five-Year Plan, "six industrial parks" will be mainly planned and constructed, that is: mobile machinery and parts supporting industrial park, coal and electricity and high loading capacity industrial park, biological and pharmaceutical industrial park, textile and clothing industrial park, commerce and trade and logistics industrial park and cultural creativity industrial park. In 2015, the struggling goal is "678" regarding gross regional domestic product, fixed-asset investment and financial income. "6" means gross regional domestic product RMB6 billion; "7" means fixed-asset investment RMB7 billion; "8" means financial income RMB800 million. Gross regional domestic product shall reach RMB6 billion by 2015. At that time, the comprehensive ranking should be among the provincial-level development zone, jumping from the present 20th place to top 10.
Liu Fubiao, director of Management Committee, male , born in Da'an City of Jilin Province in 1969, Han nationality, member of the Communist Party of China, postgraduate background , economic management major, has successfully worked as secretary of Youth League Committee, county and town Party Committee, secretary of politics and law committee and Discipline Inspection Committee.
2.3 Contact Method
Contact Unit: Baicheng Economic and Technical Cooperation Bureau of Jilin Province
Address: 10th Floor, Kaifa Building, No. 88, Xingfu South Street, Baicheng City, Jilin Province
Contact Person: Sun Shuhai 0436-5086035
Fax: 0436-5086019 
Postal Code: 137000 
E-mail:bcjkjhj@126.com
 
Contact method of city (prefecture) of project
Contact Unit: Baicheng Economic and Technical Cooperation Bureau
Contact Person: Liu Lin
Tel 0436-5081011   13943687990
Fax 0436-5081011
E-mail bclyj01@126.com
 
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