Bosch: Game China

Bosch, a company that has been in China for more than a century, possesses an almost deified technique and possesses a magical "excess profit." But the headache for Bosch is that while leading the diesel market, the game with all parties in China will also begin.

From the 1920s to the 1950s, Charles Dickens Fritz Gerard, professor of Oriental History at the Australian National University, once visited China. The exploration journey made him pay a lot of cost. China's mystery and beauty made him have a book impulse. For the name of the book, he did not flow into the general form of "travel", but used a question: "Why China ( Why did you go to China?).

Today, Bosch, which has been in China for 100 years, has to start facing new problems: Why BOSCH?

Even earlier than Professor Fitzgerald, in 1909, in the first year of Xuantong, this was the last year of emperors in Chinese history. The ancient and mysterious East Empire is about to begin a period of turmoil but a history of opportunities and hopes. The most advanced Bosch company came to China.

At this point, it was only eight years before the car entered China. Bosch opened its Chinese market with its magneto ignition system.

From the initial auto parts to the later power tools and then television technology and equipment... After a series of trials, in the 1980s of the last century, Bosch, who was not satisfied with the status of the seller, began to prepare to establish a joint venture company in China. Localized production.

Shopping malls such as the battlefield, the Chinese market's most attractive to Bosch is of course high profits. From diesel high-pressure common rails, to electronic stability programs, to ECUs, CVTs, etc., Bosch can indeed become a leader in this field every time, even an unstoppable monopolist in the market.

While bringing advanced technologies to China and promoting the development of Chinese automobiles, the voice of questioning also followed. Especially in the heavy-duty diesel engine high-pressure common rail market, Bosch has occupied more than 60% of the market share and is an absolute monopoly and overlord. Bosch's huge monopoly profits, even if it is Delphi, Denso and other multinational giants, they can only look back.

Many people are skeptical: Is Bosch doing "bargaining business" in China? What may make Bosch even more troublesome is that while leading the diesel market, the game between the parties in China will also begin.

The monopoly is right and wrong

Although the global financial crisis has caused the Bosch Group's overall business to decline, “the growth of the Chinese market has attracted attention”, which makes its Chairman of the Board Franz Fehrenbach happy.

Bosch Group's sales in 2009 were 38 billion euros, a year-on-year drop of 15%; of which automotive business fell more than 20%. However, sales revenue in China will reach about 2.6 billion euros, an increase of 15%.

With the increasing demand for environmental protection, safety and energy-saving technologies from the global automotive industry, Bosch’s advanced technologies do have absolute advantages. The Asia-Pacific region, especially the Chinese market, has become a top priority. In 2009, Bosch has invested 160 million euros (about 1.5 billion yuan) in China. Bosch will continue to increase investment in order to further expand its business in China.

The profits are derived more from the excellent high pressure common rail technology of the world's largest and most advanced diesel system supplier. Following the continuous production of diesel jet pumps in 1927, the name “Bosch” was associated with almost all important technological innovations in the diesel sector, such as distribution pumps, electronic control systems, common rail systems and exhaust gas aftertreatment systems.

The fact is that three years ago, that is, before the country was about to implement the National III emission regulations, Bosch had already produced 100,000 common rail systems in China. Its goal is to reach 1.3 million by 2010. Nowadays, Wu Yan, an automotive expert, points out that Bosch's market share of China's State III diesel common rail system is about 60%, while the market share of China's EFI companies is only 5%.

The disparity between the two figures, related parties believe that: "Bosch has an absolute advantage in the diesel engine market, occupying a monopoly."

For Bosch, this is obviously a dangerous statement. In the same hot software industry, the well-deserved boss Microsoft has just encountered a lot of trouble.

On December 17, 2009, Microsoft and the EU reached an agreement to provide up to 12 other web browsers for Windows users in Europe. "Under the hegemony of huge fines, Microsoft, which has always been rich and fragile, has finally bowed its head." The relevant media made such comments.

The European Commission said that Microsoft has made a legally binding commitment to the European Union to avoid further fines that may be imposed on the company. The European Commission had previously worried that Microsoft may break the rules of competition by bundling its Internet Explorer IE with its new Windows operating system.

"Millions of European consumers will benefit from this decision because they are free to choose the web browser they need." An anti-trust commissioner at the European Commission said that Microsoft's commitment will provide users with better browsers in the future.

This agreement ended the 11-year antitrust dispute between the two sides. Since 1998, the European Union began to investigate whether Microsoft has abused its monopoly on Windows operating systems, including servers and media player software. By 2007, Norway's Opera browser filed an anti-monopoly complaint with the European Commission requesting Microsoft to provide consumers with browsers that support Internet standards. The browser-related disputes officially began a two-year investigation. So far, the European Commission has imposed a total fine of 1.68 billion euros on Microsoft.

According to statistics, currently more than half of the global Internet users are using IE browser. While Mosra's Firefox browser accounts for about 32%, Opera only accounts for 2%.

In fact, Microsoft's monopoly accusations are not limited to the browser level. Regardless of whether it is an operating system or a text document, the accusations against Microsoft monopoly in recent years have been endless.

However, Bosch does not agree with the "monopoly." Wang Xiaodong, deputy general manager of diesel system sales at Bosch Automotive Diesel Systems Co., Ltd., told the reporter: “There is no monopoly or monopoly problem. After all, Denso, Siemens, and Delphi are also doing in China, and some domestic companies are doing, such as Asia. Shinco et al."

The problem is that compared to Microsoft, Bosch did not "bundle" other businesses, but its share has exceeded 50%. Even if the total number of common rails produced by multinational corporations such as Denso, Delphi, etc. in China is less than that of Bosch, then It seems that industry insiders have reason to believe that it has an absolute advantage in China's diesel common rail market.

Wang Xiaodong’s answer to this is that Bosch only made preparations earlier. When regulations have not yet been introduced and the market is still immature, Bosch has already made a lot of up-front investment, and R&D is also done in China. “It’s only done early. Bigger, now with some rewards.”

100 revolutions

The heads of some domestic truck companies now have two kinds of mood: to cooperate with Bosch to enhance their own joy, and helplessness after paying a higher price. They have nowhere near the price of Bosch's high-pressure common rail system, but the vaguely revealed common information is that Bosch has earned excess profits in the Chinese market.

In fact, this seems to be an indisputable fact in the industry. Someone once suggested in the interview that the price of some common rail diesel injection systems supplied by Bosch to Chinese companies was significantly higher than that of supply strategic partners, and the profit of some high-end products was even higher than that of a diesel engine.

Contradictory mood can be imagined. What can't be circling in their mind is the question: How much high profit does Bosch actually earn in China? According to their understanding, in a foreign country, a high pressure common rail system Bosch sells for only 500-600 euros, while in China it sells for 1,300 euros. Profit more than doubled.

On the price chart of Bosch diesel engine high pressure common rail system in China, it clearly shows the price curve from 30,000 yuan/set to 25,000 yuan/set, to 20,000 yuan/set, and then to 15,000 yuan/set. .

However, for Chinese truck manufacturers, this is obviously not the result that Bosch can expect after localization. Although Bosch set the goal of “developing localized products to meet the requirements of the Chinese market” at the beginning of the construction of Wuxi in China, it is not actually the case.

In fact, in the opinion of experts, most parts of Bosch's high-pressure common rail system need to be imported from abroad. Many of the import companies of these parts and components are Bosch subsidiaries. Only ECU is a wholly-owned company established by Bosch. In production, it also only accounts for about 20% of the total system cost. Other insignificant small parts are sourced from local companies including Wuxi Weifu.

In this regard, Wang Xiaodong explained that Bosch has not determined the localization rate, but he did not deny the above model, saying that Bosch has a global procurement system, some may use imported materials, and some may use local materials. The raw materials to be used are the highest quality and most cost-effective in the region.

Another controversy stemming from "high profits" is that in sharp contrast with high profits, China's tax revenue has not been "increased."

"Profits have been diverted. For Bosch, income has only shifted from one pocket to another, but for the host country, it has lost a lot of revenue."

Take a four-cylinder high-pressure common-rail system as an example. Each system needs a high-pressure common-rail track, and the price of each track is about 400 euros. According to the exchange rate on February 23, one euro was 9.2890 yuan, and 400 euros was equivalent to 3716 yuan. In addition, each cylinder needs to be equipped with an injector. The price of each injector is between RMB 1,000 and RMB 1,700. The four-cylinder machine needs four injectors, and the injector price is calculated as RMB 1200. Only the price of fuel injectors and rails reached 8,516 yuan. The market price of a 4-cylinder machine is about 15,000 yuan, and the price of injectors and rails account for 57% of the entire system. Since the two key components are purchased abroad, in this way, at least 57% of the value of a system is transferred abroad.

A similar situation is also evidenced by the sales staff of an entire vehicle company. After upgrading from State II to State III, about half of the entire vehicle price increase is the cost of the EFI system. Under the same displacement conditions, the price of a light truck will increase by 10,000 to 20,000 yuan, while that of a heavy truck will increase by about 30,000 yuan. A large part of these increased costs is the cost of the EFI system. For light trucks, 10,000 to 20,000 yuan is already 15% to 50% of the current light truck price, which is unacceptable to light-card users.

Even so, the scope of choice is not great.

A person in charge of a large-scale diesel engine plant in China introduced: “Because multinational EFI companies will not significantly reduce the price of electronically controlled fuel injection and still monopolize the high profits of EFI systems, we must absorb our own costs and, if necessary, increase the number of engines. The user’s unwillingness to pay for these engines has to some extent hindered the implementation of State III.”

Bosch's "explosive oil" profits not only made the eyeballs in the circle, but also attracted the attention of the industry's managers. The China Association of Automobile Manufacturers and the China Internal Combustion Engine Industry Association had previously submitted a report to the relevant government departments, calling attention to companies such as Bosch. In the Chinese diesel injection system, the market share is huge, the product price and profit are too high.

Price cuts

In September 2008, Bosch announced that the common-rail system has reduced prices in a large scale. For diesel engines used in light commercial vehicles under 3.5 tons, an economical high pressure common rail product is introduced. The price is between 5,000 yuan and 6,000 yuan. The price reduction is very high. The price reduction is mainly directed to the common rail of small engines. system.

Although the advantages are still strong, it is undeniable that Bosch has encountered a real crisis in China. This price reduction has become a major turning point for the China III engine market. This turning point began with the birth of EGR.

This made many people relieved. Prior to the implementation of the National III emission requirements, Zheng Zhen Nissan Party Secretary and General Manager Guo Zhenyu had been worried that the cost of high-pressure common rails would be too high, while pickups themselves would have low profits, and new costs would inevitably be transferred to consumers. In addition, because a large part of light-duty diesel trucks belong to agricultural vehicles, the prices of such vehicles are relatively low and their cost bearing capacity is relatively low. The emergence of EGR temporarily solved the troubles of Guo Zhenluo. Its cost dropped to 3,000 yuan to 5,000 yuan. Many companies, like Guo Zhenjun, did not hesitate to choose EGR with price advantages.

In fact, the research and development boss of a large-scale commercial vehicle company once bought a set of EGR for heavy-duty trucks to come back to study, and the construction cost of EGR that is not doped with water "is not necessarily lower than that of high-pressure common-rail." Only when CNHTC introduced EGR prices, he was quite shocked because the profits earned by Sinotruck were not high compared to Bosch's high pressure common rail.

Even later, some scholars expressed great opposition and thought that EGR technology has major engine hidden dangers. As a countermeasure against China III, EGR can meet the challenge of upgrading the national IV emissions in the future.

However, Dong Jianping, deputy secretary-general of the China Association of Automobile Manufacturers, showed tolerance for various technical routes. He told reporters: "Don't discuss whether the emergence of EGR is reasonable, and it is reasonable to exist." From now on, EGR does Can not meet the future national IV emissions, but at the time is still studying which of the appropriate routes, it should allow the existence and exploration of various routes.

China National Heavy Duty Truck is also very clear that the production of EGR is actually a last resort. The reason is simple. The fact that the electronically controlled common-rail system of the engine that meets the emission requirements of State III is monopolized by Bosch has always been a detriment of the industry. Domestic engine companies have also complained about this. In desperation, it is influenced by the influence of the Chinese market and the idea of ​​contending with overseas monopolies. China National Heavy Duty Truck launched the EGR engine product and conducted a powerful crackdown on its monopolistic behavior. Although it is controversial and needs to pay a lot of money.

It must be acknowledged that the emergence of EGR has become an important driving force for Bosch's price cuts. Although Bosch repeatedly stated in the media, with the increase in the localization rate and the increase in production, the price of Bosch's high-pressure common rail will continue to decrease, but just like the above commercial Car executives said: "The pace of Bosch's price reduction is still a bit slower."

Feeling oil questioned

Truck driver Li Gang has been plagued by "happy troubles" for some time - he just bought a large freight truck equipped with high-pressure common rail country III engines and travelled between Shandong and Inner Mongolia. During the operation, it was found that fuel consumption was significantly higher than that of the original Taiwan II vehicle. This makes Li Gang understand: Is the price of environmental protection a fuel economy? At the same time, news about EGR fueling was constantly being transmitted from peers, and Li Gang could not help but be annoyed.

Similar phenomena also occur in some other truck drivers. It is understood that 90% of the national III heavy truck users in the current market respond to vehicles using fuel of the same type as the National II, and fuel consumption increases between 5% and 15%. This has caused people's concerns: Is China III really a synonym for oil? If this is the case, does it run counter to fuel-efficient emissions reductions? Further, does it mean that as the country promotes higher emission standards, it will bring gradually increasing fuel consumption to end customers?

Concerns continue to accumulate into fear. There are rumors that this is the result of Bosch despising the Chinese market. Because in Europe, diesel engines equipped with Bosch's high-pressure common rail injection system can save on average 30% of fuel compared to traditional gasoline engines, while reducing CO2 emissions by about 25%. Compared with the traditional mechanically controlled diesel engine, it can also significantly improve the emission efficiency, reduce emissions and noise. It is precisely because of these advantages that electronically controlled high pressure common rails are the development trend for clean diesel engines and are widely used in Europe.

Why did the "high pressure common rail" "transplant" to China but there was an "oil accident"?

One argument is that although Bosch has decades of research and development experience and technology accumulation, these data are based on local conditions of use. Or due to time constraints or staff shortages, Bosch directly brings foreign technologies to China, but it lacks sufficient improvement and matching for China's use of the environment and Chinese products.

Zhao Junhua, forecasting manager of CSM Worldwide Greater China Automotive Power System, said that a law of the auto industry itself determines that many key technologies need long-term development. Diesel injection is a complex system involving many automotive electronic systems. It also requires extensive long-term experiments to accumulate large amounts of data.

As for the manpower problem, some people speculated that from the perspective of Bosch's capacity, only 200,000 units can be produced in one year, and in terms of domestic medium and heavy trucks, the demand in 2009 is about 1 million units. The huge demand and limited capacity and time may also be the reason for the matching problem.

This conjecture is not groundless. In foreign countries, such as Europe, Bosch has installed a high-pressure common rail for a certain model for a period of one to two years, which does not include the previous data accumulation process.

Now, Li Gang also recalls why he chose to use high-pressure common rails. The main reason is that there is a fear that emissions will not pass. There are not a few people who take this attitude among users. Now, some people have raised new concerns about the economical common rail launched by Bosch after the price cut: The price is cheap, some parts are saved, and the cost can be reduced. Such as line pressure protection of the sensor, seemingly not important things, but save it will affect the use of features. When this problem occurs, there will be oil leakage from the tubing, and if it is too high, there will be an accident of a flash pipe.

The director of an engine factory technical center introduced: “Compared with the original high pressure common rail system, Bosch has a very different economic product, some functions are simplified, the original electronic control is reduced, the injection pump and the nozzle are all different, so the cost It's bound to be much lower."

Today, Bosch is also quite concerned with how to deal with this situation. Wang Xiaodong stated that the demand in the Chinese market has changed very quickly, and Bosch's matching time has indeed been rushed. When initially introduced to the market, due to the existence of various factors, such as the initial introduction of the National III diesel engine in the combustion chamber, the intake system and the end user's habits in the use of less adaptation, resulting in some high fuel consumption In addition, customers did not fully understand Bosch's high-pressure common-rail system at the beginning. After all, it was a new technology that needed to be explored slowly. After a period of “inconformity period”, especially in these two years, Bosch Company has carried out a large number of calibrations and trainings on diesel engine plants and vehicle manufacturers, and worked with them on projects.

Wang Xiaodong said that the host users are becoming more familiar with our system. Bosch once again taught them technical difficulties and key points. They strongly supported the OEMs to make good improvements and match, making the engine and the vehicle reach the optimal state. They really build the ability to calibrate. "Bosch hopes to achieve a win-win situation with Chinese OEMs and end customers."

Secret savings

No one can guess how long Bosch's growth myth in China can last. But no matter how powerful opponents are, China, a country with mysterious power, is bound to become a persistent dream of Yamada. As the general manager of Denso (China) Investment Co., Ltd., following the establishment of a plant in China by Bosch, Yamada is also using Changzhou, China as one of the global strategic production bases for the DCR system.

In the common rail products, the electrical installation performance is also excellent. In 2008, Denso's common rail system sold 2.5 million units in the global market, accounting for 16% of the global market share. Second only to Bosch. At the same time as achieving results, Denso is also clearly aware of the gap between itself and Bosch, the head of the common-rail industry. In fact, there is still a big gap between Denso and Bosch. The popularity of auto dieselization in Europe is very high, and this is precisely the main market of Bosch; and the main markets for Denso are in Japan and North America, and these two regions The dieselization of automobiles is less popular.

“In the global strategy for the DCR system, there are four production companies planned, located at the headquarters in Japan, Thailand, Hungary, and Changzhou, China. It is not difficult to see that there are three manufacturing companies in Asia, which means that electric equipment is installed in Asia. The importance of the market: Asia is a high-growth market, and many countries are in the stage of economic development. The demand for commercial vehicles is huge. Nearly all commercial vehicles and parts and components companies in the world have set their sights on this, and this is a common-rail system. It provides a very broad space for development, and the center of the Asian market is undoubtedly China.The Japanese market only produced 70,000 heavy trucks a year, and a company in China National Heavy Duty Truck was close to 100,000 in one year. The great potential is self-evident."

Just when Yamada decided to rely more heavily on China and other emerging markets, Delphi, which holds a 20% share of the Chinese market, has also started a new move. Delphi once purchased Lucas Diesel Engine Technology from TRW and entered the common rail fuel injection system market in 2000. According to the company’s plan, production of the Delphi Common Rail fuel injection system is expected to reach 2.5 million units in 2006. Especially on June 8, 2005, Delphi has just signed a cooperation contract with DaimlerChrysler on a diesel system, and plans to develop and supply a complete diesel common rail and engine management system for DaimlerChrysler. As a result, the status of its global diesel system supplier continues to be strengthened. Following the establishment of a technology center in South Korea, Delphi reported in early 2009 that it had successfully cooperated with Chinese domestic auto companies and had already confirmed the introduction of common rail technology.

In the main technical mastery, Cummins is also a non-negligible one. The pump nozzle is the earliest patent of Cummins and it is still in use. Of course, some changes have been made. It is not the former mechanical pump nozzle that uses electronic control. The person in charge of Cummins introduced that in 11 liters or more of diesel engines, they all use electrically controlled pump nozzles.

Yang Fuyuan, a professor at Tsinghua University, talked about such an episode. In fact, prior to EGR, the single-pump technology was able to compete with Bosch's high-pressure common rail. At that time, some domestic manufacturers had developed R&D.

The precision components of the electronically controlled monomer pump are lower compared to the high pressure common rail and the manufacturing cost is lower. This kind of technology is suitable for localization, and the manufacturing cost can be greatly reduced. From these two perspectives, the use of electronically controlled combination pump technology, from manufacturing costs to terminal prices, is highly competitive. "Using our own current technology route and production model, compared to the products provided by foreign giants, will have a 30% to 40% advantage in price."

“The use of electronically controlled monomer pump technology will not affect the development and application of next-generation technologies,” Yang Fuyuan said. The electronically controlled monomer pump not only satisfies Euro III, but also meets Euro IV and Euro VI standards. In Europe and the United States, all Euro III and Euro IV heavy-duty truck diesel engines use electronically-controlled single-unit pumps, and almost no common-rail systems are used.

Even if he took EGR to detour, at present he thinks it is still necessary to pick up the technology of electronic-controlled monomer pump.

Despite the difficulties, local Chinese companies have not given up on the development of diesel engine EFI systems. The electronic control combination pump of Chengdu Wang's Witt has already begun loading small batches of vehicles. The products of enterprises such as the Wuxi Oil Pump Nozzle Research Institute and Liaoning Xinfeng Group Jier Fuel Injection Co., Ltd. have begun trial production and preparation, and FAW has also launched the first model. Independently developed high-pressure common-rail State III diesel engine. Some domestic diesel engine manufacturers such as Yuchai, FAW Daichai and other local companies in the EFI system support, but also give it reason to hold greater ambitions for the future.

"At the same time, we must also see gaps and deficiencies," said Dong Jianping. After years of accumulation, many Chinese manufacturers have mastered similar technologies. However, our product performance has always failed to reach Bosch's accuracy level. This is mainly because China's manufacturing industry is relatively thin, and it still lacks the accumulation of large amounts of data. At the same time as absorbing, we must also add innovation in order to form our own core competitiveness.

At present, the pattern of strong momentum in the Chinese auto market may give local companies a chance to precipitate and gain momentum. In any case, for Bosch, it is undoubtedly more important to think about how to continue its good time in China in an increasingly terrible competitive environment.

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