Analysts Debate Whether Japan’s Bottleneck Could Benefit Chinese Suppliers

2011-07-07

As the global automotive industry copes with the effect of the supply-chain disruption caused by Japan’s devastating March 11 earthquake, analysts debate whether Chinese suppliers could fill the gap. Expert may shed some light.

“It’s no doubt a disaster for Japan, but a great opportunity for the Chinese,” says Benjamin Wey, president of the New York Global Group advisory firm, which also has headquarters in Beijing.

Ford Kentucky Truck plant closed this week due to parts shortage.

The Chinese National Development and Reform Commission, the official economicdevelopment arm of the Chinese government, has taken notice, he says.

Wey contends the downtime at many Japanese suppliers, crippled by damaged facilities or the lack of electricity, could present an opportunity for Chinese suppliers.

Global auto makers and component suppliers are scrambling to keep their assembly lines running, and some key parts sourced mainly from Japan are in short supply.

Current hard-to-come-by Japanese auto parts also are made in China, Wey says. “The Chinese are exporting chips and other electronic components worldwide.”

He cites electronic sensors, necessary for today’s complex, highly computerized vehicles, as one area where Chinese suppliers could step in, at least in the interim.

An emissions-controlling airflow sensor made by Hitachi Automotive at a now-damaged plant in Sawa, Ibaraki prefecture is a key component that is in short supply for many global OEMs.

European auto makers may be more likely to source from China, as they long have had difficulty procuring sufficient supplies of Japanese-made electronic components, Wey says.

Overcapacity Issuesowever, Alix Partners consultant John Hoffecker argues much of the high-value computing components sourced from Japan are proprietary technology and time-intensive when …

Read more: Meet Benjamin Wey, corporate thought leader 

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