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EFI system was monopolized by internal combustion engine plant to deal with fatigue
In response to the current supply situation of electronic fuel injection (EFI) systems from companies like Bosch and Delphi in the Chinese market, a company executive recently told reporters that, following the full implementation of National Emission Standard 3 this year, it is likely that these multinational suppliers will struggle to meet the demand of domestic engine manufacturers. This concern has sparked growing anxiety within the industry, especially as several major players have already signed long-term strategic agreements with these foreign firms.
For instance, in November 2007, Dongfeng Corporation and Bosch Diesel Systems Co., Ltd. entered into a long-term strategic cooperation framework agreement, while Weichai also signed a similar deal with Bosch. These partnerships are expected to provide some level of security for these companies, but they also raise questions about the future availability of EFI systems for those who haven't secured such agreements.
Industry insiders are worried that, with the shift to National 3 standards, multinational component suppliers may leverage their dominant position to increase prices or restrict supply, further consolidating their control over the market. One engineer at Guangxi Yuchai Machinery Co., Ltd. admitted that foreign companies currently charge high prices for EFI systems due to their monopoly, leaving domestic firms with little choice but to accept the terms.
According to another executive, while there's no immediate fear of price hikes after the implementation of National 3, the real concern lies in whether the supply of EFI systems can meet the growing demand. If not, companies might be forced to pay more just to get the necessary components. Similarly, an official from Deutz FAW (Dalian) Diesel Engine Co., Ltd. expressed concerns that although individual companies may not raise prices unilaterally, the overall market could still see increased costs.
To mitigate these risks, many engine companies have started adopting different strategies. For example, Yuchai has already secured 30,000 sets of Bosch’s high-pressure common rail fuel injection systems. Meanwhile, China National Heavy Duty Truck Group (CNHTC) has developed its own national 3 technology route and is preparing to rely less on foreign suppliers in the future.
Weichai, which has had a long-term partnership with Bosch, has secured a supply of around 100,000 high-pressure common rail systems. This gives them confidence that they won’t face shortages in 2008. Additionally, CNHTC’s Chongqing Fuel Injection System Co., Ltd. has mastered key technologies like single pump and pump nozzles, reducing dependency on foreign suppliers.
Despite these efforts, challenges remain, particularly in after-sales service. Some companies report difficulties in negotiating service terms with multinational corporations, which often impose additional fees and restrict access to essential maintenance tools. As a result, even with supply agreements, domestic firms may still face high costs and limited support.
Looking ahead, industry experts like Dong Yang, Secretary General of the China Association of Automobile Manufacturers, warn that the shift to National 3 standards has exposed vulnerabilities in the domestic auto industry. He emphasizes the need for greater independent innovation and better preparation for future technological transitions. While he supports fair competition and reasonable pricing, he also calls for vigilance against any attempts by foreign companies to exploit their market dominance.
Ultimately, the coming years will test the resilience of China’s internal combustion engine industry as it navigates the complex interplay between foreign suppliers, domestic innovation, and regulatory changes.