industry overview - growth enterprise · pdf fileimpeding the growth rate include urban...

Certain facts, statistics and data presented in this section and elsewhere in this document arederived from various publications issued by PRC Government entities and other third parties. Webelieve that the sources of this information are appropriate sources for such information and havetaken reasonable care in extracting and reproducing such information. We have no reason to believethat such information is false or misleading or that any fact has been omitted which would render suchinformation false or misleading.

SOURCE OF INFORMATION

We have engaged Frost & Sullivan to conduct a detailed analysis of the automotive parts supplier

market in the PRC. Frost & Sullivan is an independent global market research and consulting company

which was founded in 1961 and is based in the United States. We have included certain information from

the report prepared by Frost & Sullivan in connection with such detailed analysis (the “Frost & Sullivan

Report”) in this document because we believe such information facilitates an understanding of this

market. In preparing the Frost & Sullivan Report, Frost & Sullivan adopted a methodology of both primary

and secondary research to obtain information on the PRC automotive vehicle and parts industries from

various sources within the PRC. Primary research involved interviews with leading industry participants

at automotive vehicle manufacturers and automotive parts suppliers and related industry experts.

Secondary research involved reviewing company reports, independent research reports and data based

on Frost & Sullivan’s own research database. The information contained in this section has been

obtained from sources Frost & Sullivan believes to be reliable, but there can be no assurance as to the

accuracy or completeness of the included information. We paid a total of RMB 960,000 in fees for the

preparation of the Frost & Sullivan Report.

Frost & Sullivan has developed its forecast on the following bases and assumptions:

• That the social, economic and political environments of the PRC will remain stable during the

forecast period, which ensures the sustained and steady development of the PRC automotive

market;

• That the PRC automotive market is expected to grow at a rate in line with the PRC’s overall

economic growth over the forecast period; and

• The market share of each automotive vehicle manufacturer group is expected to develop in

line with the product plan of such manufacturer group and the product features and

performance of each vehicle group.

THIS WEB PROOF INFORMATION PACK IS IN DRAFT FORM. The information contained herein isincomplete and is subject to change. This Web Proof Pack must be read in conjunction with the sectionheaded “Warning” on the cover of this Web Proof Information Pack.

INDUSTRY OVERVIEW

— 54 —

checklist I.NPara 4.7(a)

In preparing the Frost & Sullivan Report, Frost & Sullivan arrived at certain conclusions pertaining

to the Group’s market share and position, diversity of product offerings, distribution channels and brand

awareness within the PRC automotive parts supplier market using the following methodologies:

• The Group’s position as one of the leading independent brake, steering and suspension

products providers in the PRC passenger vehicle market was determined as a result of a

multi-factor analysis which considered the Group’s capabilities along the value chain; its

position as one of the largest automotive parts suppliers for brake, steering and suspension

products as measured by sales volume; and its diversified product offerings compared with

other providers.

• The Group’s position among PRC automotive parts suppliers in terms of diversity of product

offerings was determined through a combination of research of reliable public information

such as interviews with other automotive parts suppliers or passenger vehicle manufacturers

and data from Frost & Sullivan’s own research database.

• The Group’s position among automotive parts suppliers for brake, steering and suspension

products in terms of geographic reach and market penetration of its sales and marketing

network in the PRC was determined through a combination of research of company reports,

interviews with industry experts, distributors and sales departments of other automotive parts

suppliers and data from Frost & Sullivan’s own research database.

PRC PASSENGER VEHICLE MARKET

The PRC is the largest automotive market globally, and the automotive industry is becoming

increasingly significant in terms of the economy of the PRC. The sector is experiencing significant growth

in vehicle production, due to the general economic growth in and a shift in automotive production to the

PRC.

Passenger Vehicle Sales — Development Over Time

7%

29%

27%3%

8%

2%

2%

22% 24%

22%21%

6%

6%

5%

3%13%

29%

19%21%

8%

5%

6%

6%6%

2005 2011 2017E

China

EuropeU.S.

Brazil

Japan

Russia

IndiaOthers

China

EuropeU.S.

Brazil

Japan

Russia

IndiaOthersChina

Europe

U.S.Brazil

Japan

Russia

India

Others

Total Sales: 53.1 million vehicles Total Sales: 59.9 million vehicles Total Sales: 77.7 million vehicles

Source: Frost & Sullivan, Chinese Association of Automobile Manufacturers


INDUSTRY OVERVIEW

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Significant growth potential remains, given that car density remains significantly lower than in

mature markets. The chart below illustrates how the PRC’s passenger vehicle density is a fraction of that

of mature markets, such as the United States, Japan, France or Germany.

Global Passenger Vehicle Density

Units per thousand persons

2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

China US Japan Germany France

Source: Frost & Sullivan, China Association of Automobile Manufacturers

As shown in the chart below, the PRC passenger vehicle market (measured in terms of annual

vehicle sales) has grown at a CAGR of approximately 20.5% from 2003 to 2012 and is expected to grow

at a CAGR of approximately 8.0% from 2013 to 2017. The PRC passenger vehicle market is expected

to continue to grow, albeit at a lower pace, as the demand for cars remains strong. However, factors

impeding the growth rate include urban congestion, slower GDP growth and restrictions on purchasing.

PRC Passenger Vehicle1 Sales & Production Volume Forecast

3.35.2 6.3 6.8

10.3

13.8 14.5 15.516.7

18.119.5

21.1

2.8 3.92.9 4.0

22.8

3.35.2 6.4 6.7

10.4

13.9 14.515.5

16.8 18.119.6

21.122.8

0

10

20

30

Unit millions

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

CAGR 2003–12 Sales: 20.5%

Production: 20.9%

CAGR 2013–17E Sales: 8.0%

Production: 8.0%

Sales Production


1 Passenger vehicles include basic passenger vehicles, sports utility vehicles (“SUVs”), multi-purpose vehicles (“MPVs”) and

mini-buses.


INDUSTRY OVERVIEW

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Since 2006, the sale of local brands as a proportion of total passenger vehicle sales has been flat

overall.

The PRC Government has been actively supporting local brands through direct and indirect support

such as the “cars go country” subsidy program, fuel efficiency subsidy and lower tax rates.

However, as shown in the charts below, despite the direct and indirect policy support for local

brands, the split between foreign and local brand vehicle sales has not changed dramatically over the

past few years and is expected to remain relatively stable in the near future. This is primarily due to the

local brands’ relatively weaker brand image and lower product quality. In addition, there is also a

consumer shift taking place in third and fourth tier cities in the PRC, which have traditionally been local

brand dominated markets, from local branded vehicles to foreign branded vehicles.

Local Brand vs. Foreign Brand Joint Venture Market Share

28.6% 28.2% 28.3% 26.3% 28.3% 30.2% 28.4%

71.4% 71.8% 71.7% 73.7% 71.7% 69.8% 71.6%

0%

20%

40%

60%

80%

100%

Market Share (%)

2006 2007 2008 2009 2010 2011 2012

Local OEM JV OEM



INDUSTRY OVERVIEW

— 57 —

HYUNDAI-KIA PRC OPERATIONS SUMMARY

Hyundai-Kia has two joint ventures in the PRC. Hyundai Motors has partnered with Beijing

Automotive Group Co., Ltd. and formed Beijing Hyundai to produce Hyundai branded vehicles, while Kia

Motor co-founded Dongfeng-Kia with Dongfeng Motor to manufacture Kia branded vehicles.

In 2012, Beijing Hyundai and Dongfeng Kia were among the top passenger vehicle manufacturers

in the PRC. The following chart sets forth PRC market share data for passenger vehicle manufacturers

in 2012:

PRC Passenger Vehicle Market Share by Manufacturer in 20121

16.8%

8.8%

5.5%

5.3%

4.8%

4.1%3.6%3.2%3.1%2.9%

2.8%

39.1%

Volkswagen

General Motors

Hyundai

Nissan

Toyota

HondaCheryGeelyKiaBYD

PSA

Other


1 Passenger vehicles include basic passenger vehicles, SUVs, MPVs and mini-buses.

Beijing Hyundai is expected to increase its total production volume to 1.14 million units by 2015

from 0.86 million in 2012, primarily due to the expected introduction of three additional models by 2015.

Dongfeng Kia is expected to increase its total production volume to 0.69 million units by 2015 from 0.49

million in 2012, primarily due to the expected introduction of two additional models by 2015.


INDUSTRY OVERVIEW

— 58 —

GENERAL MOTORS PRC OPERATIONS SUMMARY

The General Motors brand vehicle manufacturers comprise the second largest passenger vehicle

group in the PRC in terms of unit sales in 2012, with an approximately 8.8% market share, behind

Volkswagen Group.

The PRC operations of General Motors, which include Shanghai GM, have continued to grow in

sales volume. Shanghai GM is expected to increase its overall vehicle production volume in the coming

years, to 1.76 million units by 2015 from 1.34 million in 2012, primarily due to the expected introduction

of five additional models by 2015.

GEELY PRC OPERATIONS SUMMARY

Geely is the second largest local brand vehicle manufacturer in the PRC in terms of unit sales in

2012, with an approximately 3.2% market share, behind Chery.

Geely’s sales volume has continued to grow. Geely is expected to increase its overall vehicle

production volume in the coming years, to 0.73 million by 2015 from 0.49 million in 2012, primarily due

to the expected introduction of four additional models by 2015.

OVERVIEW OF THE PRC AUTOMOTIVE PARTS SUPPLIER MARKET

Generally, a supply relationship with a vehicle manufacturer for automotive parts relating to a

specific vehicle model begins at the outset of the development of a new vehicle model or upon the

redesign of an existing vehicle model by the vehicle manufacturer. Vehicle manufacturers generally

initiate the sourcing of automotive parts for vehicle production. Supply contracts with vehicle

manufacturers typically relate to a specific vehicle model and may have either a one year term subject

to automatic renewal, or a term covering the expected production period for the related vehicle model,

which is generally between five to eight years. Although the supply contracts do not require the vehicle

manufacturers to purchase a minimum quantity, the long-term nature of the supply contracts and

historical volume orders provide some demand predictability to automotive parts suppliers.

In recent years, local PRC automotive vehicle manufacturers have experienced growth in

production volumes and most joint venture manufacturers now operate with a greater level of design and

procurement rights, rather than being a pure manufacturing business. Furthermore, as a result of

cost-cutting initiatives adopted by vehicle manufacturers, there is continuous downward pricing pressure

on automotive parts suppliers. As a result, more parts suppliers are localizing their production in the

PRC, not only for efficiency but also for cost-cutting purposes. As part of these developments, vehicle

manufacturers are expected to outsource more vehicle components to their suppliers, which will result

in increased requirements for their suppliers to design and engineer components to the satisfaction of

their customers. In addition, due to consumer demand and regulatory measures, vehicle manufacturers

focus more on improving the fuel efficiency performance, comfort and safety of vehicles.


INDUSTRY OVERVIEW

— 59 —

These developments have also led to a more competitive environment for automotive parts

suppliers. The automotive parts industry provides components, systems and modules to (i) vehicle

manufacturers for the manufacture of new vehicles, as well as (ii) the aftermarket for use as replacement

parts in varying quantities to a wide range of wholesalers, retailers and installers. In the automotive

industry, parts suppliers are generally divided into tiers: “Tier 1” suppliers, which provide their products

directly to vehicle manufacturers, and “Tier 2” suppliers, which sell their products principally to other

suppliers for combination into the other suppliers’ own product offerings. The automotive parts industry

is generally characterized by high barriers to entry, significant start-up costs, production know-how and

long-standing customer relationships. The new vehicle parts supplier market is highly influenced by new

vehicle sales volume, while the aftermarket parts supplier market is influenced by the number of

passenger vehicles on the road and average vehicle age. The diagram below sets out the general

dynamics within the PRC automotive parts supplier market and its participants:

Supply Chain Structure of PRC Automotive Parts Market

End UserTier 1 Suppliers

Tier 2 Suppliers

Raw Material Suppliers

Vehicle Manufacturers

After market Channels

Aftermarket OE market

Source: Frost & Sullivan


INDUSTRY OVERVIEW

— 60 —

The PRC automotive parts supplier market is characterized by two types of suppliers: captive andindependent suppliers. Captive suppliers are those that have a direct relationship with automotivevehicle manufacturers, be it through a joint venture agreement with a vehicle manufacturer or aparent-subsidiary relationship. Independent suppliers include both domestic and foreign automotiveparts suppliers, and joint ventures between independent domestic and foreign automotive partssuppliers, that do not have a direct relationship with any particular vehicle manufacturer. The table belowprovides an overview of the different automotive parts supplier groups that operate within the PRCmarket:

Type and Definition of Automotive Parts Suppliers

Supplier type Definition Key Suppliers

Captive Suppliers

Subsidiaries of vehicle manufacturers Huayu, Fawer, etc.

Joint ventures between vehicle manufacturers

and independent parts suppliersYanfeng Visteon, etc.

Independent Suppliers

Chinese domestic independent parts

manufacturersWanxiang, Huaxiang, etc.

Joint ventures between foreign and Chinese

domestic manufacturersN/A

Foreign independent parts manufacturersMando China, Bosch,

Continental, etc.


Demand for automotive parts is generally a function of the number of new vehicles produced, whichin turn is a function of prevailing economic conditions and consumer preferences. The primary criteria bywhich vehicle manufacturers judge automotive parts suppliers include price, quality, service,performance, design and engineering capabilities, innovation, long-term cooperation relationship andtimely delivery.


INDUSTRY OVERVIEW

— 61 —

While the total PRC automotive parts supplier market has grown over four-fold in size from 2006to 2012, supplying vehicle manufacturers with automotive parts still remains the largest component of theautomotive parts supplier market. The chart below provides the historical and projected value of suchmarket for passenger vehicles:

Overall Output Value & Export Revenue of PRC Automotive Parts Industry1

540 757948 1,082

1,586

2,2212,503

2,8313,216

165 210 226 198 280 329 348 378 434 506

1,979

0

1,000

2,000

3,000

4,000

Billion RMB2006-12 Output Value CAGR: 26.6%2006-12 Export Revenue CAGR: 13.3%

2013-15E Output Value CAGR: 13.1%2013-15E Export Revenue CAGR: 13.3%

Overall Output Value Annual Export Revenue

2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E


1 The PRC automotive parts industry includes suppliers of passenger vehicle parts, commercial vehicle parts, motorcycle

parts and accessories, which roughly represent 35%, 25%, 5% and 35% of overall value, respectively. The exchange rate

of annual export revenue is based on the exchange rate in the corresponding year.

The vehicle manufacturer parts supply market is expected to continue to grow in conjunction with

increasing annual vehicle production. Additionally, more advanced technologies are being implemented

in passenger vehicles, primarily due to increased awareness of driver safety, lower implementation costs

and stricter regulatory requirements. Most foreign suppliers are expected to benefit from this trend; also,

it is expected that advanced technological products will be localized in the PRC in the future.

As more global parts suppliers are expanding their manufacturing capacity in the PRC, vehicle

manufacturers are also increasing their localization rate to reduce costs, including both mechanical and

electronic parts costs as well as overhead and research and development expenses.

In addition, the PRC is becoming a global procurement center of global vehicle manufacturers, as

the automotive parts industry develops rapidly and exports increase.

Such trend is expected to expand to more technology-rich components in the future, with more

global parts suppliers establishing their research and development centers in the PRC to improve their

local technological capability to serve the local market.


INDUSTRY OVERVIEW

— 62 —

OVERVIEW OF THE BRAKE PRODUCTS MARKET IN THE PRC

As shown in the chart below, from 2007 to 2012, the PRC brake products market experienced a

high CAGR of 23.4%, driven primarily by high growth in the passenger vehicle market and the

introduction of products using new technology such as electronic parking brake products. Going forward,

growth is still expected to be at an 8.4% CAGR from 2013 to 2015.

Market Size of PRC Passenger Vehicle Brake Market

50.062.1

95.0

126.9 133.0143.2

155.3168.4

182.5

0

50

100

150

200

Unit millions

2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

2007-12 CAGR: 23.4% 2013-15E CAGR: 8.4%


A brake system is generally divided into mechanical parts (like a pedal, caliper and drum/disc) and

electrical parts (such as an anti-lock brake system and electronic stability control system). The chart

below shows the market shares for brake products in the PRC for 2012:

PRC Brake Products Market Share for 20121

25.7%

11.7%

8.6%8.3%7.1%

7.1%

4.2%

3.3%

2.4%1.6% 20.1%

BoschMando China Wanxiang

Hyundai Mobis

Advics

Others Continental

TRW

Delphi

Asimco Taifeng


1 Based on sales volume of key brake parts for vehicles.


INDUSTRY OVERVIEW

— 63 —

checklist I.NPara 4.7(b)(c)checklist I.NPara 4.8

Key suppliers in the PRC’s brake products market are Continental, TRW, Bosch, Mando China,Wanxiang, Advics and Hyundai Mobis. Such brake product suppliers are focused on expandingproduction facilities in the PRC to gain more market share. The table below provides an overview of thedifferent key brake components within a brake system and the key suppliers in the PRC of eachcomponent:

Key Brake Component Suppliers

150-450

150-350

200-300

300-500

380-700

600-1,000

200-450

Key Parts Key Suppliers Price Range (RMB) 1

Caliper Continental, TRW, Mando China, Wangxiang

Drum brake Mando China, Continental, BWI, APG, Wangxiang

Parking brake Mando China, APG, BWI

Electronic parking brake Mando China, TRW, Continental

Anti-lock brake system Continental, Mando China, TRW, Hyundai Mobis

Electronic stability control system Bosch, Continental, TRW, Mando China, Hyundai Mobis

Master cylinder & booster Continental, TRW, Bosch, Mando China


1 Assumed an indicative price range commonly observed. Prices fluctuate according to market conditions, product

specifications and technology improvements. Price information has been derived by Frost & Sullivan through interviews with

leading automotive vehicle manufacturers and suppliers in the PRC.

OVERVIEW OF THE STEERING PRODUCTS MARKET IN THE PRC

As shown in the chart below, the steering products market in the PRC grew at a CAGR of 23.4%from 2007 to 2012. The high rate of growth in the steering products market was driven primarily by thegrowing vehicle production volume and increasing implementation of electric power steering, which ismore expensive but enjoys better steering performance than traditional hydraulic power steering.

Market Size of PRC Passenger Vehicle Steering Products Market

5.4 6.7

10.4

13.9 14.5 15.5 16.8 18.119.6

0

5

10

15

20

25

Unit millions

2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

2007-12 CAGR: 23.4% 2013-15E CAGR: 8.0%



INDUSTRY OVERVIEW

— 64 —

Mando China currently enjoys a high market share in the PRC steering products market and also

has a solid presence in the PRC electric power steering products market. The table below shows the key

suppliers in the PRC for different steering products:

Key Steering Product Suppliers

1,200-2,400

380-950

2,700-3,500

300-700

Types of Steering Systems Key Suppliers Price Range (RMB)1

Electric power steering ZF, Mando China, JTEKT, TRW, Showa, etc.

Hydraulic power steering Henglong, ZF, Mando China, etc.

Electro-hydraulic power steering Mainly supplied by ZF and TRW

Manual steering Henglong, JTEKT, etc.





Mando China currently ranks third in the PRC steering products market with an approximately

11.2% overall market share in 2012 (based on sales volume of steering systems for vehicles), primarily

supplying Beijing Hyundai, Dongfeng Kia and Shanghai GM. The table below shows the PRC market

shares of the key steering product suppliers for 2012:

PRC Steering Products Market Share for 20121

24.9%

18.2%

11.2%10.9%

7.7%

7.1%

5.4%

5.2%

4.2%3.7%

2.3% ZF

Heng Long

Mando China JTEKT

Yubei

TRW

NSK

Nexteer

Showa Delphi

Others


1 Based on sales volume of steering systems for vehicles.


INDUSTRY OVERVIEW

— 65 —

checklist I.NPara 4.7(c)checklist I.NPara 4.8

OVERVIEW OF THE SUSPENSION PRODUCTS MARKET IN THE PRC

As shown in the chart below, the suspension products market in the PRC grew at a CAGR of 23.4%from 2007 to 2012. The market has primarily been driven by increasing vehicle production volume. In thefuture, growing implementation of semi-active systems and adaptive suspension systems is alsoexpected to provide some additional growth momentum to the market. The suspension products marketin the PRC is expected to grow at a CAGR of 8.3% from 2013 to 2015.

Market Size of PRC Passenger Vehicle Suspension Product Market

22.327.7

42.5

56.8 59.4 63.969.2

74.981.1

0

20

40

60

80

100

Unit millions

2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

2007-12 CAGR: 23.4% 2013-15E CAGR: 8.3%


With a higher implementation rate of advanced suspension technologies like adaptive suspension,

the suspension system unit price is expected to increase as electronic components (such as sensors)

are integrated into the system. This is a future trend in the suspension systems market from which

Mando China is expected to benefit. The table below shows the key suppliers in the PRC for suspension

products.

Key Suspension Product Suppliers

100-350

150-480

200-700

Key Parts Key Suppliers Price Range (RMB) 1

Strut ZF Sachs, Mando China, Showa, KYB, etc.

Shock absorber ZF Sachs, Mando China, KYB, etc.

Damper springmodule for suspension

Independent suppliers like ZF Sachs, Mando China, captive supplier

like Huizhong (SAIC)





INDUSTRY OVERVIEW

— 66 —

There are two different types of market players in the PRC suspension products market: vehicle

manufacturers, captive suppliers and independent suppliers. Huizhong is a key player among captive

suppliers and ZF Sachs is the leader among the independent suppliers. Mando China is well positioned

as the second largest supplier with an approximately 16.6% market share in 2012 (based on sales

volume of suspension systems for vehicles). The chart below shows the market shares in the PRC

passenger vehicle suspension products market for 2012:

PRC Passenger Vehicle Suspension Products Market Share for 20121

17.0%

16.6%

16.3%10.4%

9.6%

6.1%

5.5%

4.6%

3.5% 3.4%7.1%

Mando China

Captive Suppliers

Others ZF Sachs

Xichuan

KYB

Showa

Jiuding

Tenneco

Hitachi ATL


1 Based on sales volume of suspension system parts.

2 Captive suppliers refer to joint ventures or subsidiaries of vehicle manufacturers, and there are more than 20 captive

suppliers in China including Huayu Auto, Huizhong, Fawer, Beijing Monroe and GAC Component.

OVERVIEW OF THE ADVANCED DRIVER ASSISTANCE SYSTEMS MARKET OPPORTUNITY IN

THE PRC

As the PRC automotive market has become the largest in the world, the pace of introduction of

advanced technology has accelerated under increasingly competitive conditions. Global vehicle

manufacturers and parts suppliers are continuously focusing on local research and development

investments and transferring their global advanced technologies to the PRC to improve manufacturing

quality, provide a more attractive product offering and remain competitive. A higher penetration of

advanced technology content within passenger vehicles is anticipated, particularly advanced driver

assistance systems (“ADAS”) which is experiencing rising penetration in mature markets already. A

similar trend is expected in the PRC in coming years, especially for foreign brand and high-end models.

According to Frost & Sullivan, the market size of these advanced technologies in the PRC could

reach US$90 million by 2015. In the near term, it remains to be seen what the exact ADAS strategy of

PRC vehicle manufacturers will be. However, Frost & Sullivan believes there will be much market

potential for the penetration of ADAS in the PRC, primarily due to tightening safety regulations and an

increasing safety awareness among customers.


INDUSTRY OVERVIEW

— 67 —

Considering Hyundai-Kia’s plans to introduce some ADAS technologies in its future premium

models, Mando China (through its access to Mando Korea’s advanced technology) is expected to benefit

from this trend.

OVERVIEW OF INPUT COSTS FOR AUTOMOTIVE PARTS SUPPLIERS IN THE PRC

The PRC’s labor costs have been increasing over the years, from RMB 12,700 per annum of

average wages in the manufacturing industry in 2003 to RMB 36,700 in 2011, representing a CAGR of

14.2%.

Furthermore, wages for staff and workers are expected to grow over the near term. The PRC

Government recently pledged annual wage gains of 15.0% in its new five-year plan to support domestic

consumption. The following chart shows the historical trends in average wages in the PRC

manufacturing industry:

Average Wage in Manufacturing Industry

32.236.5

41.8

12.7 14.3 15.9 18.221.1

24.4 26.830.9

36.7

14.015.9 18.2

20.924.7

28.9

0

10

20

30

40

50

60

Overall Workers Manufacturing Workers

RMB thousand

2003 2004 2005 2006 2007 2008 2009 2010 2011

2003-11 Overall Workers CAGR: 14.7%2003-11 Manufacturing Workers CAGR:14.2%

Source: National Bureau of Statistics of China


INDUSTRY OVERVIEW

— 68 —

checklist I.NPara 4.7(e)

Aluminium and steel prices in the PRC have remained relatively stable over the years, driven by

regulation of prices by the PRC government. The following chart shows the historical prices in the PRC

for aluminium and steel:

Key Raw Material Price Evolution

0

5,000

10,000

15,000

20,000

2008 2009 2010 2011 2012

RMB/ton

Aluminum Price Steel Price

Source: Shanghai Futures Exchange


INDUSTRY OVERVIEW

— 69 —

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