China’s Changan suppliers push back against forced payment cuts

One of the sources said the amount by which Changan was asking suppliers to reduce their prices varied, with some bigger suppliers asked to absorb cuts of less than 10 percent.

Zhejiang Tongxing Technology Co., a vehicle air conditioning systems manufacturer, said in its IPO prospectus earlier this year that Changan Automobile Group was among clients who had asked for lower prices last year.

Changan, Ford and Mazda did not immediately respond to requests for comment.

In the letter, the suppliers said they wanted Changan to reverse the decision, which they said was prompting other automakers to follow suit and ignored the companies’ years of work to support the auto industry.

Over the years, suppliers had become “blood donors” to efforts by Chinese automakers to compete using a low-price strategy, they added.

“It will definitely cause adverse effects at home and abroad and will cause a large number of Chinese auto suppliers to fall into dire straits or go bankrupt.”