Wanxiang: Which giant is the international supplier of parts?
During the economic crisis, before the market hit its lowest point, Wanxiang may need to reassess its overall strategy. Wu Guanqiu, the spiritual leader of the Wanxiang Group, who has long been based at Diaoyutai, might find it hard to remain passive in the face of such challenges.
"Wanxiang may be going through its toughest time in 40 years," Wu said in a recent media interview. Since October 2008, the company’s orders have plummeted sharply. In January of this year alone, exports dropped by 47% compared to the same period last year. Although some business segments saw an improvement after February, it hasn’t been enough to offset the negative impacts of the global economic downturn.
In times of difficulty, Wanxiang may also need to re-evaluate its strategic direction and look for ways to adapt and grow.
**Wanxiang: Moving Forward**
The universal strategy has given the company a clear, consistent direction — a so-called "stupid approach" that smart people like Lu Guanqiu have used successfully. “There’s no problem with the general direction; it's just a matter of timing,†Lu once explained. This strategy has proven effective, but it’s not without its complexities.
In fact, there's more to it than meets the eye. Some may mistakenly believe that Wanxiang is only strong in specific automotive components, which is largely true from a Chinese perspective. However, as a company aiming to become a modern, forward-thinking enterprise, its standards should be higher.
Wanxiang isn't limited to one single direction. In recent years, it has increasingly expanded beyond its traditional auto parts business. The company now operates across 10 major industries, including agriculture, mining, real estate, new energy, finance, education, and tourism. Its official website lists five main business sectors, with many ventures starting as early as 1999. Even its real estate division dates back to 1993.
This level of diversification is far more extensive than even industry giants like Magna or Bosch. Yet, in the eyes of outsiders, this expansion often appears scattered — a pattern that aligns with Lu Guanqiu’s philosophy of entering key areas and waiting for four years before seeing results. For example, despite investing over 300 million yuan in new energy vehicles over the past decade, the project has barely covered basic R&D and equipment costs. It seems clear that Lu is betting on the future of electric mobility.
However, such broad diversification — spanning energy, finance, real estate, and automobiles — requires massive capital. With sales reaching 47.5 billion yuan in 2008, the company’s resources are stretched thin. Considering management and investment costs, the number could be even lower. Many observers question whether such a strategy makes sense, especially when China's auto parts industry lacks companies that can compete with top-tier international suppliers. Wanxiang was seen as the most promising candidate, yet its current path remains confusing and questionable.
In contrast, Bosch — a company known for its technological prowess — has scaled back its ambitions in recent years. "Technology is the beauty of life," is its slogan. Robert Bosch, the founder, once said, “The worst thing for a company hoping to build a lasting foundation is to have no rivals.†That’s why Bosch has consistently invested heavily in R&D, spending 7.7% of its revenue on research in 2007 — significantly higher than the less than 3% spent by most Chinese auto parts firms.
Bosch’s success has inspired many, but few can match its technical depth. Even Denso, the world’s second-largest supplier, struggles to catch up. While some see China’s version of Bosch as the ultimate goal, it’s unlikely to be a feasible model for Wanxiang due to cultural and infrastructural differences.
Therefore, for Wanxiang, Bosch may serve more as inspiration than a direct model. Instead, the most suitable benchmark might be Magna, a Canadian-based automotive supplier known for its vast range of operations.
**Magna: Diversified and Dynamic**
Magna Electronics recently acquired Suxing Electric in Zhangjiagang, showcasing its wide-ranging business interests. From automotive parts to vehicle production, Magna covers almost everything related to cars. It is often referred to as the world’s most diversified automotive supplier.
While Magna’s business style is hard to pin down, its focus remains largely on the top 10 auto parts segments, each offering modular supply solutions. This contrasts with Wanxiang’s more scattered approach.
Moreover, Magna has always avoided direct competition with original equipment manufacturers (OEMs) by not producing complete vehicles. This restraint has helped it maintain strong relationships with customers. In contrast, Wanxiang’s entry into electric vehicles could create friction with its partners.
**Learning from Magna**
Many companies look for role models during their growth. While there are differences between Magna and Wanxiang, the Canadian firm offers valuable lessons. Both countries have similar conditions in terms of domestic auto industry development and lack of strong local parts suppliers.
Both companies started with acquisitions and developed through strategic expansions. Unlike Bosch, which has a long history and deep roots, Magna’s flexible approach gives it an edge in partnerships and collaborations.
Additionally, both are family-run businesses, though Canadian culture shares more similarities with German culture than Chinese. Magna’s strategies in expansion and talent acquisition are worth studying.
For Wanxiang, the challenge lies in balancing diversification with focus. While spreading eggs across multiple baskets can reduce risk, it also increases complexity. In times of crisis, it’s a good opportunity to refine strategies and ensure long-term stability.
Over the years, YIEN Grinding Machines have been acclaimed both domestically and internationally. We provide the best machines with the best service. With a proud commitment to quality control, YIEN surface grinders consistently surpass all the rigorous quality requirements of the European and Japanese markets.
Our mission is to exceed the needs of our customers by creating new and innovative designs through continuous development and pioneering new technologies.
Cnc Surface Grinding Machine,Machine Surface Grinder,Fine Cnc Surface Grinding Machine,Multifunctional Cylindrical Grinding Machine
Ningbo Yien Machinery Co., Ltd , https://www.yienmachinery.com