This week's high-level Federal Government visit to China is already yielding positive results for not only the car component sector but the local industry as a whole. Industry Minister, Senator Kim Carr, says several large Chinese brands, including Chery, JAC, Geely and Dongfeng, are seeking new markets like Australia for technology and investment, particularly in the depressed components sector.
Trade Minister, Simon Crean, joined Senator Carr on his lightning visit to the country's leading manufacturers. Carr says that apart from direct investment, there is room for reciprocal agreements between the local supply industry and China. "We've seen with Geely in terms of Drivetrain Systems International transmissions but there are other investments," he says.
"I'm expecting that there will be increased interest in the components section of the automotive industry," Carr says. "That's likely to be quite an attractive area for future investment from the Chinese motor producers." Some of that investment is already bearing fruit.
In March, Chinese carmaker Geely threw a lifeline to the Albury-based DSI transmission company, paying $52 million for the company to secure its future and boost its research and development.
Carr says the Chinese are looking for high-quality developed technologies and partnership arrangements. "And they know, I believe there is increasing awareness, that Australia provides the capacity to produce good results in those areas," he says. "Now there are 11 companies operating here at the moment that have come out from Australia."
Carr says research organisations like the CSIRO and even Geelong-based Deakin University, are working on technologies that will be very attractive to the Chinese car industry. "In terms of light metals, in terms of composite materials, in terms of fuel systems, there are huge opportunities opening up," he says.
Australia's reputation as a mature, respected market is helping too. "We have a mature industry that might well be small in volume but is high in reputation," Carr says.
Ultimately, he says the diversification of the local component and car sector will help "strengthen our industry's capacity to ensure its sustainability". The issue of intellectual property rights, a controversial problem between some foreign carmakers and some Chinese brands, was also discussed.