* Foreign suppliers Faurecia, Eberspaecher, EcoMotors step
up China investment
* China to adopt tougher diesel emission standards in
* Government also aims to slash fuel consumption by
By Samuel Shen and Kazunori Takada
SHANGHAI, June 9 Global companies that
specialise in making vehicle emissions cleaner are rushing to
take advantage of Beijing's war on pollution, as Chinese
automakers look to comply with tougher regulations in the
world's biggest auto market.
Firms from Bill Gates-backed start-up EcoMotors Inc to
Faurecia SA, a parts supplier controlled by French
giant Peugeot SA, are jostling to help automakers meet
new diesel emission rules taking effect in January, despite
concerns the standards may not be strictly enforced.
"Generally speaking, we will benefit from higher emission
standards in China as they will further spur our business
growth," said Liu Xiaoxing, China vice president of Cummins Inc
, a U.S. diesel engine maker that partners with Faurecia
and counts China as its biggest and fastest-growing market.
Pollution has reached crisis levels in China after decades
of growth-at-all-costs, contributing to hundreds of thousands of
deaths a year and sowing the seeds of social unrest. Automobiles
are chiefly responsible for China's foul air, according to the
country's environment watchdog.
Among other measures to tackle the problem, from next year
China will adopt a new set of diesel emissions regulations aimed
at eliminating mainly trucks and lorries that produce high
levels of harmful substances such as nitrogen oxides, carbon
monoxide and particulate matter.
The country will also take six million high-emission cars
off the road this year, and is drafting regulations aimed at
slashing fuel consumption by passenger vehicles.
"Foreign component makers will benefit most from the
stricter emissions standards over the long term, as they have
more advanced technology than Chinese suppliers," said Li Jia,
an analyst at consultancy IHS Automotive.
Leading component suppliers that can help Chinese automakers
cut emissions include Continental AG, Robert Bosch
GmbH, Denso Corp, Tenneco Inc and
Faurecia, Swiss private bank Bank J. Safra Sarasin Ltd said in a
report on June 3.
The technologies they bring to the table include exhaust
treatment systems, turbo chargers, direct injection mechanisms
and powertrain controls.
CLEARING THE AIR
The World Health Organization says about 2 million people
die every year from air pollution, mostly in developing nations.
Beijing is among the world's most polluted cities, it says.
Concentrations of fine atmospheric particles known as PM2.5
averaged 89.5 micrograms per cubic meter daily in the Chinese
capital last year. That was 156 percent higher than national
From Jan. 1, 2015, China will adopt the long-delayed
national stage 4 emission standard (NS4) - the equivalent of
Euro 4 standards - on diesel vehicles, meaning automakers will
be allowed to sell only trucks and lorries that puff out lower
levels of pollutants than they do currently.
China also aims to reduce average fuel consumption by
passenger vehicles to 6.9 litres (1.8 gallons) per 100
kilometres (62 miles) in 2015, from 7.38 litres currently.
Mathias Miedreich, Asia president of Faurecia's emission
control technologies unit FECT, whose clients include makers of
both diesel and gasoline-propelled vehicles, said annual sales
stood to grow 40 percent faster than the broader auto industry's
growth rate over the remainder of the decade.
The company forecasts FECT's China revenue will double to 2
billion euros ($2.72 billion) by 2020. FECT recently invested
several million euros in a plant in Beijing to expand capacity
for NS4-compliant exhaust systems.
"China represents the highest growth market ... We believe
our products will give us significant advantage," Miedreich
Other players are also boosting investment. EcoMotors struck
a deal in March with a unit of state-owned China FAW Group Corp
, one of China's biggest producers of commercial
vehicles, to jointly build a $200 million engine plant in China.
EcoMotors President Amit Soman said many Chinese automakers
were looking to skip straight to the latest technology in fuel
efficiency rather than "just do small changes in conventional
German automotive supplier Eberspaecher Group is also
getting in on the act, setting up a joint venture in December
with Shaanxi Automobile Group Co Ltd to make exhaust systems for
the China market.
Faurecia's Miedreich said the risk that the tougher emission
standards would not be enforced, exposing companies that invest
in the technology to potential losses, was worth taking.
"The risk is, basically, we spend money and have no return,"
he said. "Our decision is and will be - we will take the risk."
($1 = 0.7345 Euros)
(Editing by Stephen Coates)