Volkswagen Group China launches restructuring program
ShanghaiDaily.com recently reported that Volkswagen Group (China) Corp will be strengthening its control on its auto parts suppliers in China by launching a restructuring program.\
In line with the German automaker’s aim to increase its sales on the world’s second largest auto market, this move is expected to let Volkswagen monitor product quality as well as cut costs in its enlarged sourcing operations from China. Wolfsburg-based Volkswagen plans a new program called, “Qualification Supplier China Program,” which will offer training, supervision on its domestic auto parts suppliers in cooperation of a third party.
The said program will also encourage domestic suppliers to work out future planning and to target inefficiencies in production, technology, management and workflow. It was reported that the came one week after the German automaker increased its sales target by 26 percent to 900,000 in China.
“The program will also help to enroll Chinese suppliers to our global sourcing system,” Volkswagen stated.
Successfully entering the Chinese market in 1985, Volkswagen has developed more than 300 auto parts suppliers in China.
Commissioning Chinese suppliers are now more attractive for automakers into their global auto parts sourcing system due to their price advantages brought by lower labor costs. Concern on quality of Chinese-made auto parts is often raised.
Last year alone, Volkswagen’s sourcing from China totaled at US$1 billion. This amount served both its Chinese venture with Shanghai Automotive Industry Corp and First Automotive Works Group.