· BMW's purchases in China account for one-fifth of global purchases

The BMW Group has a long-standing relationship with China. As early as twenty years ago, in 1994, the BMW Group opened an office in Beijing. Up to now, in 2014, China has become the most critical core market of the BMW Group in the world! At the same time, we also have more and more customers in China. As Chinese customers begin to truly understand and appreciate the various BMW brands, such as BMW, Rolls-Royce and MINI, our sales in China are also rising rapidly, growing only in the five years from 2008 to 2013. More than six times. Last year, we delivered a total of 391,000 vehicles of various types to Chinese customers, which accounted for one-fifth of the BMW Group's global sales. (Note: 1,963,798 vehicles sold worldwide).
Nowadays, China's growing consumer demand is increasing. BMW has been continuously improving its local production capacity, and in terms of procurement, it also adheres to the principle of “production decision-making procurement.” Based on this, I am also very fortunate to participate in the BMW Media Symposium. In-depth communication with Dr. Drake (BMW Group Director, Responsible for Purchasing and Supplier Networks) and Mr. Philippe Aller (Senior Vice President, Purchasing and Supplier Network, BMW Group Asia).
Question 1: First of all, I am very honored to participate in this event. I have always believed that localized procurement is a key factor in achieving development for a multinational brand. We don't know much about this. In this case, BMW can show the media relevant information in an open and honest manner, which reflects the sincerity of BMW's localization development and proves that the BMW Group has done a lot of work. I have two problems. First, Mr. Dreiger mentioned the sales situation of BMW in China. The sales volume may exceed 400,000 this year. What is the expected purchase volume of BMW in China? Second, as a high-end brand, how does BMW ensure the quality of locally sourced parts?
DREAGER: First of all, I would like to talk about our overall purchasing ideas. Looking back on the past, we are growing in terms of localization rate. The number of localized parts is increasing from one model to another. In 2003-2004, the domestic production has just started, and the country's production rate is relatively low. At present, the existing models have reached a very high level of localization rate and will be further improved in the future.
For example, if the existing domestic models are analyzed, if you analyze the materials and parts made in China, you will find that the body and the steel for the automobile have been localized. In addition, the lightweight of the car is made locally, and the auto glass is also produced locally. If you look at the outside, the bumper and exterior decoration on the back of the car body are basically localized. At present, the engine is not realized. You know that we are planning to build an engine factory. Therefore, after the completion of this factory, the localization rate of BMW in the engine will also increase. But at this stage, we have achieved engine localization and have accumulated good experience in this area.
Regarding your second question, for BMW, the quality standards for parts must be the same all over the world. In order to achieve globally uniform quality standards, we have 150 engineers in China working with suppliers to establish processes, use external laboratories, and inspect parts at the same time. In addition, we have a centralized quality management department in Munich, where there are 1,000 engineers supporting local work.
Reporter: I am very happy to have the opportunity to discuss with the executives of BMW parts. Mr. Dreiger just talked about BMW's innovative ability in the conversation. I think the most competitive supplier of products is the original parts supplier, who participated in the related work in the early stage of the company's research and development of new models. I want to know how many of the 150 tier 1 suppliers in BMW can achieve BMW's recognition. What are the conditions for qualifying to become a BMW parts supplier? Yesterday at the Guangzhou Auto Show, I saw the 2 Series sports wagon is very beautiful. In the first half of this year, BMW also announced the domestic plans of the three models listed. I don’t know if it is convenient and inconvenient to disclose the information about the second-line domestic products. Thank you!
Drake: Our entire supplier network is divided into different categories:
The first category is international large-scale brand suppliers, such as Dr., such suppliers have branches in China, accounting for 60-65% of our purchases;
The second category is a smaller supplier and is not necessarily a recognized international big name supplier;
The third category is local Chinese suppliers, who are also moving towards internationalization and supplying to China and other countries, including Ningbo Huaxiang, Fuyao and so on. This type of supplier has strong production capacity locally and also wants to go abroad;
There is also a category of suppliers in Europe or other countries that are acquired by Chinese companies. For example, a German company has a size of about 150 billion euros and was acquired by a Chinese company. In this way, Chinese companies can acquire new knowledge on the one hand and win a certain European market on the other.
We have plans to produce BMW X3 models for China in the future. But it is still too early to say whether the 2 Series sports wagon should be made domestically.
Question 2: You mentioned that in addition to providing services for BMW cars produced in China, do suppliers in China provide such parts and components to other markets around the world? At present, BMW's development of Chinese suppliers, in addition to the cooperation and support of 150 engineers and local suppliers just mentioned, there is no other help to promote their continued development, especially for relatively small or local supply. Business help?
Drake: As mentioned earlier, in addition to 150 local engineers, there are 1000 quality management engineers at headquarters to help Chinese suppliers. In addition, BMW often brings engineers from Chinese suppliers to Munich to visit R&D, so that they can understand the R&D process so that they can better understand our needs. Because when the supplier fully understands the environment in which the part is working, it can have a more thorough understanding of the specifications required to make the part.
For the procurement of exports, our purchases in China are 6.5 billion euros, of which close to 1 billion euros is expected to be used for export, supplying global production, including glass, wheels, electronics and high quality. These are the interior pieces.

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