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Name: Group Corporation There has been a lot of talk from US auto component suppliers recently about the number of Chinese auto parts producers entering the market place. Many of these Chinese suppliers are using their price advantage to sell new and replacement parts to US carmakers. But the process of outsourcing to Chinese companies began much earlier: in 1984. That was the year when Wanxiang Group began producing auto parts for US companies. Wanxiang Group started off as a bicycle and farm machinery repair shop for the Ningwei People's Commune in Zhejiang province with an initial investment of RMB 4,000 ?even though it was the Cultural Revolution, bicycle and farm machinery repair shops were allowed to be for-profit enterprises. Of the seven people who founded the repair shop, only Wanxiang's Chairman Dr. Lu Guanqiu, who put up the capital to found the company, and one other employee are still involved in the company. The rest have all retired. But their company has lived on and evolved greatly from the little repair shop it used to be. Today, Wanxiang Group is one of the largest companies in China and one of the first Chinese companies to go global. It set up operations in the US in 1994 with an office in Chicago. It now has offices in Europe and Latin America as well. The key to Wanxiang's success is the fact that it has over 20 years of experience producing auto parts for foreign firms, but that its staff in research and development and administration roles are Chinese. This cost-saving approach was one of one of the factors that led to Wanxiang being named one of 60 Chinese firms with the potential to go global by the IBM Institute of Business Value in 2006.And Wanxiang has gone global. This year, the company purchased Naepco, a US steering shaft manufacturer, so that it could have a manufacturing base in the US closer to its customers. Wanxiang then used Naepco to launch a takeover of Ford's steering shaft manufacturing division, which it officially acquired in April, ensuring the company with a ready-made customer base and distribution network. Wanxiang has also been in talks to purchase a portion of the auto component manufacturer Delphi, but so far nothing concrete has resulted. In China, the company has cemented its involvement in the auto industry by buying a 4% stake in Guangzhou Automobile Group in 2005. But like many Chinese companies, Wanxiang isn't happy to just have its fingers in one pie. The company has diversified into other areas ?many within its home province of Zhejiang. Two of those areas are hotels and financing. Most notably the company owns a 14% share of Minsheng Life Insurance and a 10% stake in Zheshang Bank. The latter is Zhejiang province's first private bank and specialises in serving the province's large base of small and medium-sized private enterprises that usually can't get funding from China's larger state-run banks. Wanxiang may have started as a humble bicycle and farm machine repair shop in the late 1960s, but through careful planning and a desire to be closer to its customers, the firm has grown to be one of the largest companies in China and a world player in auto parts and components.
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