A New Force in China

With strong sales, growing profits and an increasingly competent product portfolio, South Korean auto makers have given the U.S. industry a run for its money.

The trend now is spreading to China, where Korea's automotive presence is giving U.S.-based suppliers something to worry about as well.

Until recently, American component suppliers with operations in China saw the toughest competition come from China's domestic suppliers — which are more than 2,000 strong and have the backing of the State.

But as South Korea's Hyundai Motor Co. Ltd. and subsidiary Kia Motors Corp. grow their manufacturing presence in China, they are becoming the new force with which to reckon.

Korean auto makers primarily rely on their own suppliers — no matter where in the world they are located.

The new China-built Hyundai Elantra, for example, only has one Chinese supplier providing components for it — a large, multi-national joint venture, says Tenneco Automotive's Tim Donovan.

Suppliers such as Tenneco (exhaust systems and suspension components) previously enjoyed an advantage in China.

But South Korea's insular approach to manufacturing leaves outside suppliers little hope of ever seeing business with them.