During the early stages of the domestic brake line industry, the localization rate of brake lines was very low. In 1994, the national automotive industry policy was issued, which proposed the localization requirement for domestically produced parts and implemented a policy linking the localization rate with preferential import tax rates, laying a solid foundation for the localization and development of automotive components. The localization of the Santana has cultivated a large number of high-level supporting enterprises in Shanghai and other regions across the country, with most new vehicles meeting over 40% domestic parts localization rates from the outset. With the rapid development of China's brake line industry and the entry of foreign automotive component companies into China, significant progress has been made in the localization of brake lines, with the domestic parts localization rate now reaching nearly 100% for commercial vehicles and mid-to-low-end passenger cars at the time of production. After 60 years of development, especially the rapid growth in the past decade, the Chinese automotive industry has now become a legitimate and important pillar industry of the national economy.
Brake line companies are now focusing on enhancing their overall capabilities through technological innovation, constructing advantageous industrial chains, and collaborating with vehicle manufacturers for joint development to improve their matching capabilities. China is in a period of deepening reform and transformation, with the dividends of reform being further released. The huge international market and the demand for domestic product upgrades will serve as the driving force for product optimization in the brake line industry. Currently, China's brake line production companies still face issues such as insufficient innovation, daunting pressures to reduce energy consumption and emissions, significant pressures on their own brand development, and low levels of internationalization. There are also issues with the underdevelopment of the automotive service industry, which does not meet the requirements of objective development. Therefore, in the development process of the brake line industry, the ideas and concepts of vehicle manufacturers, suppliers, financial institutions, and others need to form a new understanding. They must profoundly recognize the position and role of the brake line industry in the global supply chain, embracing the notion of interdependence and actively enhancing a sense of the overall situation and industrial awareness.
The brake line industry is fundamental to the development of the automotive sector, playing a crucial role within it. As the global economy becomes more integrated and markets converge, the significance of brake lines in the automotive industry continues to grow. Market development experience and data indicate that compared to countries with a similar number of vehicles, China's hundreds of millions of cars are relatively young. With increasing vehicle age, the demand for vehicle maintenance and repairs will rise annually, presenting a promising market outlook for brake line companies. In the context of global integration, faced with increasingly fierce competition, major global automotive companies are reducing costs by expanding production scales while gradually decreasing their self-sufficiency in brake line production, adopting a global procurement strategy for parts. At the same time, international parts suppliers, to gain greater profits, are reducing or ceasing production of some non-competitive products and instead focusing on globally sourcing products with comparative advantages.
To sustain growth and achieve a better market position in the soft shaft industry, continuous research and development are essential. However, the so-called new product development often involves a model of concurrent order-taking, designing, and production, which can lead to unreliable equipment performance and immature processes, posing potential risks to customers. Overseas competitors invest substantial funds in the development of key and basic components, exploring and solidifying manufacturing processes, thereby establishing advantages in specific products or fields. When we engage in R&D, we often find ourselves playing catch-up, let alone being innovative. By the time our products are nearly mature or have gained some market competitiveness, others have already launched their long-term R&D successes, creating a virtuous cycle of competition.
