Foreign Auto Suppliers Exiting China Are No Victims
There's nothing to be gained by sticking with a fierce and unprofitable business, so departing China's auto market makes sense.
Crowded market.
Photographer: Qilai Shen/BloombergThe steady drumbeat of automakers and suppliers cutting their presence in China is almost enough to inspire pity. There’s no need. Strategic reductions, including last week’s announcement by a major Japanese parts maker, are a sign of pragmatism and an acknowledgement that the world’s largest car market isn’t necessarily a profitable one.
Nidec Corp., which makes motors used in power steering systems and electric drive trains, said it would recognize a restructuring expense as it restarts the China strategy to cut costs and limit unprofitable orders. The company slashed its full-year operating income forecast by 18% as a result. Nidec isn’t withdrawing completely, and instead will shift to localizing product development and procurement.