Development pattern and enhancing system of automotive components remanufacturing industry in China

Resources, Conservation and Recycling 55 (2011) 613–622

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Development pattern and enhancing system of automotive components remanufacturing industry in China Tongzhu Zhang a,b,∗ , Jiangwei Chu a,c , Xueping Wang b , Xianghai Liu b , Pengfei Cui a,c a b c

Transportation college of Jilin University, 130022 Changchun, China China Automotive Technology and Research Center, Box 59, 300162 Tianjin, China Transportation college of Northeast Forestry University, 150040 Haerbin, China

a r t i c l e

i n f o

Article history: Received 30 November 2009 Received in revised form 7 June 2010 Accepted 9 September 2010 Keywords: Automotive components Remanufacturing industry Development pattern Circular economy Government Incenting Pattern Technology Driving Pattern Market Leading Pattern

a b s t r a c t Along with the increasing number of automotive output and End-of-Life vehicles (ELVs) in China, resources shortage and environmental pollution are aggravating, so the tremendous need to reuse automotive components gives birth to the industry. The Chinese government becomes to realize that it is necessary to build a conservation-oriented and environment-friendly harmonious society. As the ultimate form of recycling, remanufacturing will be an effective method to promote the development of Chinese circular economy. The automotive remanufacturing industry in China is just at the preliminary stage, this paper presents some problems before remanufacturing, during remanufacturing and after remanufacturing, and then it points out several barriers, such as restrictive policies and regulations, consumer acceptance, scarcity of technologies, etc. Like many other developed countries, Chinese remanufacturing industry will also experience the primary stage, growth stage and developed stage. while the emphasis of resources input will not be the same. By analyzing the resources input characteristics at different development stages, three development patterns, such as the Government Incenting Pattern, Technology Driving Pattern and Market Leading Pattern, are put forward. At present, the cooperation of the government, industry, universities and research institutes, etc, will jointly construct the enhancing system of automotive components remanufacturing industry in China. Finally, it concludes with a summary and some suggestions in the field. © 2010 Elsevier B.V. All rights reserved.

1. Introduction In recent years, the Chinese automotive industry is growing rapidly, and China has entered the automotive community. The annual automotive output has hit 13 Million by the end of 2009, while the number of ELVs grows to nearly 3 million each year. Remanufacturing of automotive products is an effective strategy for promoting sustainability in the automotive industry. It makes automotive components more broadly available at lower prices, and it makes an obvious contribution to conservation of materials and energy. Compared to new products, remanufactured products cost only 50% of new products, while 60% of energy and materials 70%. Increasingly stringent Extended Producer Responsibility (EPR) legislations all over the world are making the consideration of End-of-Life (EoL) treatment a priority for designers, manufacturers, recyclers and governments across the globe. The Chinese govern-

∗ Corresponding author at: Transportation college of Jilin University, 130022 Changchun, China. Tel.: +86 15022162311; fax: +86 22 2437 5353. E-mail address: [email protected] (T. Zhang). 0921-3449/$ – see front matter © 2010 Elsevier B.V. All rights reserved. doi:10.1016/j.resconrec.2010.09.015

ment becomes to realize the importance of circular economy, and begins to promote the development of pilot remanufacturing in automotive industry recently. The Technical Policy for Automotive Products Recovery was jointly released by the National Development and Reform Committee (NDRC), the Ministry of Science and Technology (MOST) and the Environmental Protection Administration (EPA) on February 6, 2006. It is a guiding policy aiming to promote the automotive recycling industry in china, and it puts out the guidance and specifications at each stage of automotive products lifecycle, such as design stage, maintenance stage and EoL stage, etc. On March 2, 2008, NDRC published 14 enterprises as pilot automotive components remanufacturers and released the administrative method for pilot automotive components remanufacturing. Five assemblies, such as engine, transmission, steering gear, starter and generator, will be remanufactured, and it is the first time that automotive engine, steering gear and transmission are permitted to be remanufactured legally. The Circular Economy Promotion Law of the People’s Republic of China has been adopted at the 4th Meeting of the Standing Committee of the 11th National People’s Congress on August 29, 2008, and it came into force on January 1, 2009. In the article 40,

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it clearly indicates that the government will support enterprises to remanufacture automotive components, engineering equipment, machine tools, etc. Any remanufactured product to be sold shall satisfy the prescribed national quality standards and be labeled as a remanufactured product. Further more, Remanufacturing has now been listed in the National Long and Medium Term Program of Science Technology Development Planning as a key technology in manufacturing field. From the above, we are aware of an awakening interest in remanufacturing in China, and the Chinese government will encourage the development of automotive components remanufacturing industry in order to promote the conservation and comprehensive utilization of energy and resources. While the remanufacturing industry in China is just at the preliminary stage, there are still many barriers. It needs the cooperation of the government, enterprises, universities, research institutes and the social public, etc. The paper is organized as follows: Section 2 presents a brief literature review on remanufacturing, identifies the existing conditions of automotive components remanufacturing industry in China. In Section 3, problems and barriers are detailed analyzed, such as policy factors, technical factors and social consciousness factors that restrict the development of remanufacturing industry. The role of government, enterprises, universities, research institutes and their resources input characteristics are presented in Section 4. At different development stages, the resources input characteristics will be different accordingly, and on that basis, development patterns, such as Government Incenting Pattern, Technology Driving Pattern and Market Leading Pattern, are also put forward in Section 5. Finally, it concludes with a summary and some suggestions in the field. 2. Literature review and current situations Remanufacturing has a history of more than 50 years in some developed countries, a complete remanufacturing system forms from technical standards, processing technique, fabricating machinery to reverse logistics and delivery. According to statistics, there are 480 thousand people participating in the remanufacturing industry, 338 thousand of which are in automotive field in USA. Most researchers agree that remanufacturing is environmentally efficient and profitable (Ferrer and Ayres, 2000; Ferrer and Whybark, 2000; Guide, 1997). Robert Lund is the pioneer of remanufacturing industry, and he has made obvious contributions on this field. He believes that remanufacturing is the recycling at components level, it retains the value-added in the components (Lund and Skeels, 1983). (Yang and Chen, 2005) found that remanufacturing an engine can save 55 kg steels, 8.3 kg aluminum and 113 kW h electric powers and reduce emissions of 565 kg CO2 , 6.09 kg CO, 1.01 kg NOx , 3.985 kg SOx and 288.725 kg solid waste. (Lund, 1984; Guide, 2000; Xu et al., 2005) and many other researchers give the definition of remanufacturing as that: to remanufacture is to make as close to new as possible or even better, the wearable parts are replaced, all cores are carefully inspected and checked against original equipment specifications, replacement parts are new or remanufactured, and finally, testing is performed to manufacturer specifications and original production standards. The demand for remanufactured products will increase in the coming years as the end consumers become more aware of climate change and its impact. To develop the remanufacturing industry involves all kinds of aspects, such as politics, economics, social consciousness, etc. The entire remanufacturing system in the United States is based on private companies. It includes not just the remanufacturers, but also the suppliers of cores and specialized replacement parts, distributors and sellers of finished goods, and supporting legal, accounting, and consulting services (Lund and Hauser, 2010). It is an item of

Table 1 Pilot automotive components remanufacturers in China. Pilot remanufacturers

Remanufactured products

Picopulse (ChangShu) Auto Motor Co.,Ltd. Guangzhou Huadu Worldwide Automatic Transmission Co., Ltd. Jinnan Fuqiang Power Co., Ltd. Guangxi Yuchai Machinery Co., Ltd. Shanghai Dazhong Ruibeide Powertrain Co.,Ltd. Dongfeng Cummins Engine Co., Ltd. Zhejiang Wanliyang Transmission Co., Ltd. Dongfeng Hongtai Wuhan Holdings Group Ltd. Chery Automobile Co., Ltd. (Chery) WEICHAI POWER (WeiFang) remanufacturing Ltd. Anhui Jianghuai Automobile Co.,Ltd. (JAC) Shaanxi Fast Auto Drive Group Company First Auto Works CAR Co.,Ltd. (FAW) People’s Liberation Army No.6456 Factory

Starter, alternator, etc. Automatic transmission Engine Engine Engine Engine Transmission Engine, transmission, starter, alternator, etc. Engine, transmission Engine Transmission Transmission Engine Engine

long-term system project to develop the remanufacturing industry. (Subramoniam et al., 2009) investigated a strategic decision making method on remanufacturing for the automotive aftermarket by reviewing literature pertaining to customer demands, product design and development, cost-benefit analysis, core supply management, regulations, etc. (Klussman, 1990) discussed the conditions that independent remanufacturers will need in order to achieve remanufacturing, and these conditions include specific operation, politics, labors and inner organization structure, etc. (Paton, 1994) discussed the market factors of remanufacturing, and he thought that the market demand and technical requirements are equally important in remanufacturing. Office of Technology Assessment of America introduced a review on design and manufacturing for environment, and it discussed the position of remanufacturing and the influence of government law and regulation system simultaneously (OTA, 1992). (Cooper, 1996) summarized the overall situation of remanufacturing industry in UK, problems such as reliability design of remanufactured products, salvaging policies, barriers and promoting measures were discussed. (Seitz, 2007) reviewed the driving forces and motivations behind product takeback and recovery in general and automotive remanufacturing specifically, and he examined whether the “classic” motives for product recovery are applicable to automotive remanufacturing. While in many developing countries, remanufacturing industry just started in recent year. (Amelia et al., 2009) identified the existing conditions of automotive reuse in Malaysia, and its results indicated that reuse of automotive components in newly manufactured vehicles has never been practiced by the selected companies, and he proposed some strategies, including the establishment of the end-of-life directive, enhance research and development on design for reuse and increase reusability and economic benefits of reuse, to initiate automotive components reuse. Automotive components remanufacturing industry in China is just at the preliminary stage also. With the consideration of transportation safety and environment protection, the Chinese government has been prohibiting the reuse and remanufacturing of important ELVs components, such as the engine, transmission, steering gear, front/rear axles and the vehicle frame, etc. These components have high value-added, while all the five assemblies must be broken down and resmelted. This has caused a lot of resources waste and secondary pollution. There are 14 pilot automotive components remanufacturers in China now, and they are shown in Table 1. Most of them have just started their remanufacturing business from March 2, 2008. The Remanufacture Committee of China Association of Automobile Manufacturers was just established on April 28, 2010. Work group

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Consciousness

……

Policies

Market

…

After Remanufacturing

Standards

Technologies

Remanufacturing Remanufacturers

…

Lack of cores

Less enthusiasm

Design for remanufacturing

Before Remanufacturing

615

Fig. 1. Problems and barriers before, during and after remanufacturing.

on road vehicle recovery standardization in the National Technical Committee of Auto Standardization has been established in 2008, and a series of national standards on automotive components remanufacturing are being drafted now. 3. Problems and barriers Remanufacturing industry is comprised of a series of enterprises, such as original equipment manufacturers (OEMs), ELVs take-back enterprises, dismantlers, equipment and technology enterprises, remanufacturers and dealers, etc. Due to some restricting factors, automotive components remanufacturing industry in china is not complete, there are few enterprises participating in the remanufacturing industry and the scale of these enterprises is small. There are still many problems and barriers before, during and after remanufacturing, for example, the lack of design for remanufacturing (DFR), less enthusiasm, lack of cores, lack of remanufactures, social consciousness, etc. Current problems and barriers before, during and after remanufacturing are shown in Fig. 1. (1) Before remanufacturing: First of all, due to the government restrictive regulations, the enterprises can not enter the remanufacturing industry, including the OEMs. So there are few automotive components remanufacturers, and the OEMs have no responsibility to recycle their ELVs, therefore, they will not adopt DFR technologies. Although the Technical Policy for Automotive Products Recovery was released, detailed supporting polices have not been put out yet, so the OEMs have less enthusiasm to participate in this field and adopt DFR technologies. Worse still, they will restrict dependent remanufacturers to remanufacture their products by intellectual property method, for they are anxious that the remanufactured product will affect the market occupancy of their new products. So the number of remanufacturers in China is small, and the remanufacturability of cores is not perfect. Second, the remanufacturers are lack of cores for remanufacturing. The tack-back rate of ELVs is very low, the dismantlers could not get enough ELVs, all the five assemblies are not permitted to be remanufactured coming from the dismantlers, and the regulations do not permit the import of scraped cars for remanufacturing, although the Administrative Measures for Pilot Remanufacturing of Automotive Components permits the remanufacturing of five assemblies, remanufacturers still are prohibited to purchase cores from dismantlers, they can only take back cores from their own services, so the cores are far from enough for remanufacturing. (2) During remanufacturing: There are still no economical incentives and tax preference for the remanufacturers to reduce the cost of remanufacturing. In remanufacturing, there is no value added invoice, so the remanufactured products could not enjoy the value added tax refund policy, and the value added tax of remanufacturers can not be reduced, so it increases the cost of remanufacturing, weakens the competitive strength of

remanufactured automotive products. Further more, the intellectual property problem is also the key factor that restricts the development of remanufacturing industry. Some important components must be authorized to be remanufactured, the remanufacturable products are limited in the five assemblies during the pilot remanufacturing. The level of remanufacturing technologies in China is in a leading position in the world, such as nanotechnology, biotechnology and advanced surface technology, but there are still no maturing technology standards to control the quality and reliability of remanufactured products. Happily, we are now organizing many remanufacturers to make national standards on automotive components remanufacturing, more than ten national standards will be finished by the end of 2010. (3) After remanufacturing: The social publics have the bias that remanufactured automotive components are secondhand products of poor quality, and it reduces the market occupancy of remanufactured automotive products. Worse still, the local government administrator of car can not easily accept the change of automotive engine, so the consumers will encounter some trouble for installing a remanufactured automotive engine. There are enough social and environmental benefits to justify remanufacturing, so it is necessary and urgent for us to seek the restricting factors, provide the best solutions to break down those barriers so as to encourage even more remanufacturing. The factors that restrict the remanufacturing industry in china include three types, such as policy factors, technical factors and social consciousness factors. Policy factors mainly affect the determination of OEMs, remanufacturers and consumers, etc. It has much impact on the implementation of DFR technologies, the resources of cores for remanufacturing, the sales permission and market establishment and so on. The technical factors mainly affect the remanufacturability before and during remanufacturing, the condition of cores and the quality of remanufactured products are greatly influenced by DFR technologies and remanufacturing technologies. The social consciousness factors mainly affect the access into the industry of enterprises and purchase determination of consumers. These factors are shown in Fig. 2. 3.1. Policy factors The Chinese government has released several policies on automotive products recovery, and they are shown in Table 2. While these policies are far from enough to promote the development of remanufacturing industry, not all the enterprises are permitted to enter this field, five assemblies are still prohibited to be purchased from dismantlers, only can be bought from their own services. ERP legislations have not been made out to support the Circular Economy law and Technical Policy for the Automotive Products Recovery. Consumers are still hard to change their engine yet.

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Administrative Policies

OEMs, DFR

Cores

Related technologies

Remanufacturers

Social consciousness

Remanufacturing

Market

Consumer

Fig. 2. Restricting factors of automotive components remanufacturing industry.

Policy factors mainly affect the entry of remanufacturers, source of cores for remanufacturing, the sale permission of remanufactured products and the incentive methods to encourage the remanufacturing, such as the economy and tax policies, etc. In a word, the production system and consumption system of remanufactured automotive products have not been established due to the restrictive policies. First of all, the collection rate of ELVs in China is very low, there is almost no special enterprises collecting the ELVs, the collection rate of ELVs in china is only 40%, and nearly 60% of ELVs are not under the supervision of administration sections, and the collection rate of passenger cars is particularly lower, only 20% could be collected (Yao, 2005). The remanufacturers and dismantling enterprises lack of returned cores. There still no effective policies to change this situation, this greatly restricts the scale of enterprises. Second, the End-of-life Vehicle Recycling Management Approach (People’s Republic of China State Council Order No. 307) clearly prohibits the reuse of “scrap cars”, “scrap five assembly” and “assembling cars”. The five assemblies must be broken down and resmelted. “The Ministry of Foreign Trade and Economic Cooperation”, “The Maritime Customs Administration” and “The State General Administration for Quality Supervision” jointly released the Announcement No.37 (2001): Catalogue of Commodities Prohibited from Import (2nd batch), this policy lists the old engine and ELVs in the Catalog of Goods Prohibited from Import. Although the Administrative Method of Experimental units for Automotive Components Remanufacturing has permitted the remanufacturing of engine, transmission and steering gear, while these cores are still prohibited to be purchased from dismantling enterprises and imported from foreign countries. It only permits the purchase of five assemblies from their own after-sale services. And remanufactured products are prohibited to be sold for the social market, only permitted to be sold for their own aftermarket service. In some developed countries, for example, in the US, its remanufacturing industry are developing rapidly, remanufactures can collect cores home and abroad easily. While in china, the lack of cores is a most important restricting factor of remanufacturers. Some remanufacturers have ripe technologies, but due to the lack of cores, their businesses are trapped. For example, with more than 30 years of experience, Caterpillar is a global leader in remanufacturing technology, one of the largest remanufacturers today, and its

remanufacturing and sustainable solutions division is comprised of 18 facilities located in the United States, Mexico, Europe and Asia, remanufacturing more than 2 million components annually. Caterpillar Remanufacturing Services is the first wholly owned foreign entity to receive a remanufacturing license in China. It opened a regional remanufacturing center in the Lin’gang Industrial Area in Shanghai, and started its business in 2006, while subject to the Chinese restrictive policies on cores importation and exportation, its business progressed slowly. China National Heavy Duty Truck Group Jinan Fuqiang Power Co, Ltd., a Sino-British joint venture company, is the first genuine automobile engine remanufacturer within China. It is a member of PERA (Production Engine Remanufacturers Association) and is one of the first national demonstration enterprises for circular economics. This company has 1200 employees, while there are no enough cores for remanufacturing, so its production per year can not reach its design scale of 50 thousand remanufactured engines yet. In Chinese current practical operation of management control system, the Local Vehicle Administration Station of Public Security Authorities are not familiar with the remanufactured engines, they prohibited the legal change of engine number. The consumer have trouble to use the remanufactured engine, to some extent, this affects the consumer’s choice of remanufactured engine. The institution of “Extended Producer Responsibility” has not been set up in china, and the OEMs have little enthusiasm to participate in the remanufacturing industry. They will not adopt the DFR technologies to improve the remanufacturability of their products. With the implementation of Circular Economy Promotion Law in 2009, the extended producer responsibility regime and its related laws and regulations have been initially established in China. The Technical Policy of Automotive Products Recovery is a guiding regulation that will promote the establishment of extended producer responsibility in automotive industry in China (Fang and Ming, 2010). Remanufacturers exist in several different forms in USA, such as Conventional firms, Contract firms and Original Equipment Manufacturers (OEM). The OEM operation mode of remanufacturers has much merit to ensure the quality of remanufactured products, while if remanufacturing is very profitable, competition may occur if an independent operator intercepts some of the cores (Ferrer and Swaminathan, 2006). The USA intellectual property laws permit

Table 2 Chinese automotive products recovery related policies released in recent years. Policies

Released by

Released

Adjustment and Revitalization Plan of Automotive Industry The Circular Economy Promotion Law of the People’s Republic of China Administrative Measures for Pilot Remanufacturing of Automobile Components The Technical Policy for Automotive Products Recovery The Law of Prevention and Control of Environmental Pollution Caused by Solid Waste Automotive Industry Development Policy Management Rules of End-of-Life Vehicles Take-back

General Office of the State Council National people’s congress NDRC NDRC, MOST, EPA National people’s congress NDRC The state council

2009.01.14 2008.08.29 2008.03.02 2006.02.06 2004.12.29 2004.05.21 2001.06.16

Effective 2009.01.01 2008.03.02 2005.04.01 2004.05.21 2001.06.16

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the independent remanufacturers to remanufacture the products of OEMs. While the Chinese intellectual property laws have not clear the authorization problems yet, so the OEMs will restrict the development of independent remanufacturers by intellectual property protection. And due to the lack of effect economical policies, tax policies and extended producer responsibility regulations, the OEMs have little enthusiasm to participate in the remanufacturing industry and carry out the DRF technologies. Remanufacturers are facing with many aspects of barriers. The Technical Policy for Automotive Products Recovery puts out the concept of “extended producer responsibility”, while supporting policies have not been made out. 3.2. Technical factors Theoretically, all products could be remanufactured, and in fact, there are no real technical barriers. The key problem is how to remanufacture the products economically and how to make it satisfy the requirements of regulations. The quality of remanufactured products is the key factor that affects the social reputation of remanufactured products and the consumers’ choice. Remanufactured components will be installed on a vehicle and the vehicle will perform on the road, the safety and reliability of remanufactured products should meet the current requirements of regulations and technical standards. Advanced technologies can make it possible to reduce the cost, and make the remanufactured products meet the current regulations. The technical related factors include two aspects: DFR technologies and remanufacturing technologies. 1. Design for Remanufacturing technologies will greatly facilitate the remanufacturing. The design strategies at design and manufacturing stage will greatly affect the remanufacturability. So it needs the OEMs to pay more attention on their products design. While the OEMs in China have just realized the importance of the circular economy and remanufacturing, and due to the restrictive policies before, few OEMs adopt new DFR technologies. In fact, it is much beneficial for the OEMs to participate in the remanufacturing industry, it not only can help them to meet the ELV regulations, meanwhile, parts that cannot be reused and remanufactured enter the waste stream, examination of which reveals insights about remanufacture difficulties, the result of failure analysis can be fed back to designers so as to perfect the product design (Williams et al., 2001; Sherwood et al., 2000). 2. Advanced remanufacturing technologies can directly improve the quality and prolong the life of remanufactured products. These exists many uncertain factors during remanufacturing, such as the coming time of cores, the condition of old components, etc, so the quality of remanufactured products has a characteristic of wave properties (Yao et al., 2006). Key technologies, such as reverse logistics, disassembly, classification, cleaning, reconditioning, reassembly and residue life prediction technologies will be researched further. It is reported that the National Key Laboratory for Remanufacturing in china has achieved a lot of research results on remanufacturing theory about the failure analysis, residue life prediction and evaluation and the lifecycle assessment method. Key technologies that support the remanufacturing, such as information technologies, nanotechnology, biotechnology and advanced surface technologies, on-line quality control, test of remanufactured products, have also been researched. While these advanced technologies have not enter the enterprises widely, industrialization application will be the final target, and it will take a long time of period.

617

3.3. Social consciousness As a new terminology and concept, remanufacturing has not been widely-understood by the social public in China. There are few remanufacturers and remanufactured products are rare. The quality and service are out of people’s expectation. Many people, including the consumers, even OEMs and the government, have not truly realized the real value of remanufactured automotive products. This caused the low occupancy of remanufactured products. The government did not realize the role of circular economy in automotive industry before, so they would not permit the reuse of ELVs components, this greatly restrict the development of remanufacturing industry; The OEMs were not aware of the huge profits in remanufacturing, they are afraid of that remanufactured products will exert negative impact on their new products, so they will not join in this industry and even prohibit their products of being remanufactured by other remanufacturers. The consumers were not familiar with remanufacturing and remanufactured products, so they would not buy the remanufactured products. So the social consciousness is urgent to be corrected. While, the publicity of remanufacturing is not a temporary work, the universities, as the major personnel training agency, will play an important role in teaching the students advanced remanufacturing technologies and resources conservation awareness, for the students are not only the future experts and managers, but also the potential consumers of remanufactured products in the future.

4. Resources input characteristics To develop the remanufacturing industry needs the input and reasonable utilization of resources. The resources include land, labor, capital, technology, information, management, etc. Input subjects in remanufacturing industry include the government, industry, universities and research institutes, etc. Different input subjects have different resources in their hands. It needs the collaboration of the government, industry, universities and research institutes to promote the development of remanufacturing industry. Like other industries, the automotive components remanufacturing industry will also experience the primary stage, growth stage and developed stage. At different stages, the input subjects and the emphasis of resources input will be different too. For example, at the primary stage of remanufacturing industry in USA, the government did not announce restrictive or incentive policies, remanufacturers were motivated by profit of remanufacturing. The OEMs joined in this industry because of the environmental responsibility, General Motors, Ford and Chrysler cooperated to establish a research institute, and it took the responsibility of ELVs recovery. Independent remanufacturers can remanufacture any products freely if only they can guarantee the quality of remanufactured products and using of their own marks, and they did not need to be authorized by the OEMs, and they can take-back cores more easily. At the growth stage, the number of remanufactured products increased rapidly, remanufacturing started to reflect many of the advantages, such as economical, energy-efficient and environmentfriendly, etc. Then government began to intervene among this field, many policies were published in order to direct the development of the remanufacturing industry. While at current developed stage, the US government’s attitude to remanufacturing is that it is beneficial for the energy conservation and emission reduction, remanufactured products are regarded as new products, none restrictive and incentive policies are released. While the national condition of China is different from that of USA, The final purpose of resources input by government is to obtain the best resources and environment benefits, and the

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Table 3 Resources input characteristics at different development stages. Stage

Subjects

Emphasis

Function

Primary

Major: the government/universities Minor: enterprises Major: cooperation of enterprises, universities and research institutes Minor: the government Major: enterprises Minor: the government

Promoting policies

Initialize the industry

Market establishment

Promote the industry

Technology research and Quality control Products and market development

Perfect the industry

Growth

Developed

enterprises wish to achieve the best profits. The output effects of different input subjects will be different too. The government’s work is the foundation and orientation in China, mainly to establish the development environment of industry. If the government prohibits the development of industry, the enterprises could hardly grow, and the technology research and education in the university and research institute will be empty of meaning. The investment of enterprises is the driving force to develop the industry. The university and research institute will greatly promote the industry by training experts and advanced technologies and methods, they can bring the advanced technologies into the enterprises, further more, the university’s lessons about remanufacturing can also bring the students—the future potential mangers and consumers, a new consciousness. While at the current primary stage, the government will be the major input subject, they can encourage the establishment of development environment for the remanufacturing industry by making management methods, such as economical and tax policies to start the industry. While at the growth stage, the development condition is established, the enterprises have enough enthusiasm to join in the industry, and the social publics begin to accept remanufactured products, technologies will be the great driving force of industry, for the quality of remanufactured product is the key factor to keep the remanufacturing industry sustainable, then the major input subjects will be the enterprises, universities and research institutes. While at the developed stage, the development environment is ripe, meanwhile, the products and enterprises are plentiful for the consumers to select. Then the industry will come into the complete competition stage. The different resources input characteristics at different stages are shown in Table 3. 5. Development pattern It needs different resources input and different input emphasis at different development stages. According to the emphasis of resources input at different development stages, it puts forward three types of development patterns, such as Government Incenting Pattern, Technology Driving Pattern and Market Leading Pattern: at the primary stage, the Government Incenting Pattern is available, and at the growth stage, it can adopt the Technology Driving Pattern, while at the developed stage, the Market Leading Pattern will be adaptive.

If there is only production system without consumption system, or there is only consumption demand, but there is no production, the industry could not go further. The remanufacturing industry had been prohibited for a long period of time, so it needs the announcement of government promoting policies and cancellation of restrictive policies to establish the production system currently. For example, to permit the enterprises entry application of remanufacturing industry gradually, and to permit the purchase of important components from dismantlers and the sale of remanufactured products to the social market, etc. The set up of consumption system can be carried out by the propaganda and education to change people’s social consciousness. Additional economical and tax incentives can be beneficial to enhance the competition of remanufactured products. The Government Incenting Pattern is shown in Fig. 3. 5.2. Technology Driving Pattern Once the production system and consumption system are established, the market operation mode and the quality of remanufactured products are the key factors to keep the market sustainable (Xing and Xie, 2006). The quality and price determine the development of remanufacturing industry, and the quality and price of remanufactured products depend on the remanufacturing technologies and enterprises management. If the quality of the remanufactured products is really not lower or even better than original products with a competitive price, the consumers will be spontaneously inclined to the remanufactured products. Remanufacturers are the main body of remanufacturing industry, and they are technology applications who determine the industry direction. The main forces of remanufacturing technologies are enterprises, universities and research institutes, etc, and the quality of remanufactured products mainly depends on the technical condition of cores and remanufacturing technologies. So these two aspects of technical problems should be settled to improve the quality and reduce the price of remanufactured products. Each component has a certain ability to be remanufactured, which could be called remanufacturability, and it was added at

cores acquisition production system remanufacturers

5.1. Government Incenting Pattern In China, the government plays a crucial role in the industry development, especially at the primary stage. If an industry is prohibited by the government, it is hard to develop the industry. Once the government agrees to develop the industry, makes economic policies to incent the enterprises, to afford the development conditions, the industry can be promoted rapidly. The main work to promote the development of remanufacturing industry that the Chinese government can do is to facilitate the establishment of production system and consumption system.

government policy

market social consciousness

consumption system market management

Fig. 3. The Government Incenting Pattern.

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619

Failure analysis Using analysis Life prediction Design method DFR stage Preformation stage

Machining method

Performance analysis Product design

Specification

Qualitative analysis Evaluation method

Quantitative analysis Enterprise design

Remanufacturability Design method

Product design

Index system

Recovery Upgrade

Equipment design RM stage Achievement stage

Remanufacturing

Processing technique Quality management

Management Logistic management

Disassembly clean classification repair reassemble, et al Logistic control System plan

Fig. 4. The technology system of remanufacturing.

the design and manufacturing stage. If an old component has more potential remanufacturability, it will cost less to remanufacture it. So DFR technologies determine the technical situation of cores, and indirectly determine the quality and price of remanufactured products. Second, it is obvious that remanufacturing technologies will great affect the final quality of remanufactured products. So we can see that the technology system about remanufacturing includes two aspects of stages: design for remanufacturing stage (the preformation of remanufacturability) (Yang et al., 2007; Ijomah et al., 2007) and remanufacturing stage (the achievement of remanufacturability). The technology system is shown in Fig. 4. The National key Lab for Remanufacturing in China has achieved a lot of research fruits on repair technologies and residue life prediction methods, etc. While the DFR technologies and their application should be paid more attention by the OEMs. One of the most important technologies of remanufacturing is to upgrade the performance of the automotive products, because the requirements of automotive regulations are developing rapidly, so besides the physical wear, the components will also generate some invisible abrasion. The physical wear can be repaired relatively easier, while the invisible abrasion should be compensated by the upgrade of performance (Chu, 2007). The requirements of a remanufactured product are specified as new as possible, while the product goes to end many years after its birth, the technology standard for this product has changed greatly then. If the remanufactured product only satisfies the original standard many years ago, the remanufactured products may cause a lot of harm, which will reduce the benefit of remanufacturing.

For example, the national emission standard of automotive engine in china has come into the China Stage III from Stage II on July 1, 2008. while the end-of-life vehicles were manufactured about 10 years ago, the original standard is the China Stage II, If this remanufactured engine only satisfies the original Stage II standard, then it may cause as much pollution as an old vehicle engine, this will greatly reduce the benefit of the resources conservation and pollution reduction. It is reported that the toxic emission of one vehicle with carburetter engine may be as much as seven vehicles satisfying emission standard of China Stage II, or fourteen vehicles satisfying China Stage III. According to statistics in China, 10–15% of all the vehicles are bad at exhaust function, while the toxic emission of these vehicles occupy 50–60% of that of all the vehicles. If the emission requirements of remanufactured engine only reach to the original standard, it means that we are trying to prolong the life of polluting machine. If the government imposes the toxic emission tax or environment tax in the future, the remanufacturers have to pay more attention to the performance upgrade of their remanufactured engine. So advanced redesign and upgrade technology of remanufactured products should be highly valued. Technical standards and regulations system play an important role in specifying the quality of remanufactured products. Many standardization organizations, such as the Society of Automotive Engineering in USA and BS AU in UK, have released many technical standards about remanufacturing, such as hydraulic master, transmission, etc. (SAE, J1693, J1694, J1890, J1915, J1916, J2073, J2237, J2240, J2241, J2242; BS AU, 257), and they are shown in Table 4. In addition, the Federal Trade Commission of America released the

Table 4 Technical standards about remanufacturing issued by SAE and BS AU. Series

Name of standards

Released/revised

SAE, J1693 SAE, J1694 SAE, J1890 SAE, J1915 SAE, J1916 SAE, J2073 SAE, J2075 SAE, J2237 SAE, J2240 SAE, J2241 SAE, J2242 BS AU, 257

Remanufactured hydraulic master cylinder for motor vehicle brakes—general characteristics and test procedure Remanufactured hydraulic master cylinder for motor vehicle brakes—performance requirements Performance assurance of remanufactured, hydraulically-operated rack and pinion steering gears Recommended remanufacturing procedures for manual transmission clutch assemblies Engine water pump remanufacture procedures and acceptance criteria Automotive starter remanufacturing procedures Alternator remanufacturing/rebuilding procedures includes passenger car, heavy duty, industrial, agricultural, and marine Heavy-duty starter remanufacturing procedures Starter armature remanufacturing procedures Automotive starter drive remanufacturing procedures Automotive starter solenoid remanufacturing procedures Code of practice for remanufacture of spark and compression ignition engine

1994 1994 1988/1995/2000 1990/1995/2000 1989 1993/1998 2001 1995 1993/1995/1999 1993/1998 1993/1998 1995/2002

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Resources Recovery

Policies

Technologies

Consciousness

Market

Dismantlers

……

Research institutes

Remanufacturers

Dealers

Remanufacturing Industry Fig. 5. Market Leading Pattern.

Guides for the Rebuilt, Reconditioned and Other Used Automobile Parts Industry to manage the remanufacturing industry in US. Auto Standardization Research Institute (ASRI) of China Automotive Technology and Research Center (CATARC) takes charge of the technical administration of auto standardization and regulations in China, and it is also the secretariat of NTCAS (National Technical Committee of Auto Standardization). Now the NASTC has established the Work Group on Road Vehicle Recovery Standardization. A series of national standards and technical regulations of automotive components remanufacturing are being drafted or nearly finished. The drafting national standards and regulations of automotive components remanufacturing in China are shown in Table 5. 5.3. Market Leading Pattern At the developed stage of remanufacturing industry, the production and consumption system are well established, the policy environment and remanufacturing technologies are going smoothly, more and more enterprises enter this field, and remanufactured products are plentiful for the consumers to select, then the Market Leading Pattern will be available. The purpose of developing remanufacturing industry is to achieve the benefit of resources conservation and environmental protection. The function of government policies is to afford the development environment, and the role of advanced technologies is the driving force of industry development, and the social consciousness is to promote the consumption system. The final target

Table 5 Drafting national standards of automotive components remanufacturing in china. Drafting national standards

Status

Labels for remanufactured automotive parts Technical specifications for remanufacture of spark and compression ignition engines Technical specifications for remanufacture of mechanical/automatic transmission Technical specifications for remanufacture of alternator Technical specifications for remanufacture of starter Technical specifications for remanufacture of steering gear Technical specifications for disassembly of remanufacturable automotive components Technical specifications for classification of remanufacturable automotive components Technical specifications for cleaning of remanufactured automotive components Technical specifications for reassembly of remanufactured automotive components Technical specifications for pre-delivery inspection of remanufactured automotive components

Drafting Finished Drafting Drafting Drafting Drafting Drafting Drafting Drafting Drafting Drafting

of all those works is to establish a remanufacturing market system. Once the market is established, remanufacturers will compete legally and sufficiently, they are adjusted by the market economic, and finally, an ordered competition and developed remanufacturing industry forms. The Market Leading Pattern is shown in Fig. 5.

6. Conclusions Remanufacturing industry is a relatively mature industry in many developed countries, while Chinese automotive components remanufacturing industry is just at the preliminary stage. With the government awakening interest in remanufacturing in China, on the basis of reference of overseas successful experience in this field, this paper puts forward the development patterns and enhancing system of Chinese automotive components remanufacturing industry. Chinese special national condition is different from that in developed countries, the resources input characteristics and development patterns will be different too, so the challenge we need to overcome is how to make promoting methods suiting the real condition of China. This paper analyzes the problems and barriers the remanufacturing industry is facing before, during and after remanufacturing, and then it points out the policy factors, technical factors and social consciousness and their influence that restrict the development of automotive components remanufacturing industry. Like other industries, remanufacturing industry will also experience primary stage, growth stage and developed stage. Due to the restrictive polices in China, it needs the government to initiate the industry by making promoting policies and economical incentives. According to the different development stages, this paper puts forward three types of development patterns, such as the Government Incenting Pattern, Technology Driving Pattern and Market Leading Pattern. The function of Government Incenting Pattern is to establish the production system and consumption system, to bring up the market of remanufacturing; the Technology Driving Pattern is the key aspect and main driving force to promote the industry rapidly and efficiently under a mature policy environment conditions; while at the developed stage, remanufactured products are plentiful, then the economic market will adjust the industry by the legal and comprehensive market competition, then the Market Leading Pattern will be suitable. The Chinese government has just started to initiate the remanufacturing industry, but its scale is still very small, and the industry is still at the primary stage. The obstacles of this industry have not been cleaned clearly, and it still needs the government’s incentive policies to establish the production system and consumption system. The government, enterprises, universities and research institutes still have much work to do now and in the future.

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6.1. Government it is important to complete the law and regulation system for automotive components remanufacturing industry in order to support the Circular Economy Promotion Law and the Technical Policy for Automotive Products Recovery. For example, to set up the automotive recovery law, clearly define the Extended Producer Responsibility concept, to indicate the responsibility of the OEMs to promote the consideration of the recycling and remanufacturing of their own products. More economical and tax polices need to be made in order to improve the activeness of OEMs and remanufacturers. At a proper time, to summarize the experience of pilot automotive components remanufacturing, and modify the ELVs tack-back and scraped engine importation and exportation policies. It is urgent to clearly define the intellectual property protection principles in order to protect the OEMs and remanufacturers. The government can promote the industry by complete policies and standards system, and enlarge the consumption system of remanufactured products. Set up funds for the research of remanufacturing and DFR technologies, and permit the independent remanufacturers to remanufacture OEMs’ products under a certain condition. We are pleased to see that the technical regulations and standards system are being set up now. The mark for remanufactured automotive components has been released recently, and more than 10 national standards are being drafted now. It is predicted that these national standards will be finished by the end of 2010. The Chinese government is revising the order 307 of state council, five assemblies will be permitted to be remanufactured and purchased from the dismantlers after the release of revised version. 6.2. Industry First, the OEMs should take the responsibility to recycle their own ELVs, gradually pay more attention to the DFR technologies, participate in the remanufacturing industry or permit other remanufacturers to remanufacture their products, afford dismantling and recovery information to dismantlers and remanufacturers so as to improve the recycling rate of their ELVs. Second, remanufacturers should establish a thorough technical and standard system in the factory to improve the quality and reliability of remanufactured products, to cooperate with the research institute and universities to improve the remanufacturing technologies. Try to get the support of the government and the authorization of OEMs currently. We are pleased to see that more and more OEMs and remanufacturers become interested in this field. OEMs such as FAW, JAC and CHERY have been listed in the pilot automotive components remanufacturers, many component suppliers and independent remanufacturers have also started their business currently. The associations of remanufactures play an important role in remanufacturing industry, and we are happy to see that the association has been set up recently, and the residual task is to strong it and make it available to all remanufacturers in the future. 6.3. Universities and research institutes it will need plenty of advanced technologies and special experts to support the development of remanufacturing industry, and universities and research institutes are main force of scientific research and personnel training, so it is necessary to lay out the curriculum and set up the syllabus scientifically and rationally with the remanufacturing market oriented. Universities and research institutes should pay more attention to research projects on remanufacturing. Try to cooperate with enterprises to tackle important and difficult technical problems in order to improve the quality and reliability of

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remanufactured products. With enough professional technical and management talents for industry and the government, the industry can grow rapidly. Further more, students are also the future potential consumers of remanufactured products in the future, to develop remanufacturing industry is not temporary task, it will last for a long period of time, so it is necessary to bring up the social consciousness. Remanufacturing related lessons in the universities and colleges can strengthen the students’ resources conservation and environmental consciousness, so the potential consumption system is established. In a word, to develop the automotive components remanufacturing industry in china is like a car running in the dark: “the government policies” is the road for the car to run on, if there are no supporting polices, the remanufacturing industry is hard to go ahead; “Advanced technologies” is the engine of the car, it can keep the development of remanufacturing industry sustainable. “Social consciousness” is the light of the car, and its function is to afford the consumer guide. In order to reach the final target of industry development, it will need the cooperation of the government, industry, universities and research institutes to establish the enhancing system of Chinese automotive components remanufacturing industry. References Amelia L, Wahab DA, Che Haron CH, Muhamad N, Azhari CH. Initiating automotive component reuse in Malaysia. Journal of Cleaner Production 2009;17(17):1572–9. BS AU 257. Code of practice for remanufacture of spark and compression ignition engines. Chu J. Automotive recovery engineering. Beijing: People transportation press; 2007 [in Chinese]. Cooper T. The re-use of consumer durables in the UK: obstacles and opportunities. In: De Ron A, Douwe-Flapper S, editors. Proceedings of 1st International Workshop on Reuse; 1996. p. 66–72. Fang Z, Ming C. Administrative policies and regulations for motor vehicles recovery in china: on the principle of extend producer responsibility. In: Proceedings of the 5th International Conference on Responsive Manufacturing- ICRM2010Green Manufacturing; 2010. p. 433–7. Ferrer G, Ayres RU. The impact of remanufacturing in the economy. Ecological Economy 2000;32:413–29. Ferrer G, Swaminathan JM. Managing new and remanufactured products. Management Science 2006;52:15. Ferrer G, Whybark DC. Successful remanufacturing systems and skills. Bus Horizons 2000;43(6):55–64. Guide VDR. Scheduling with priority dispatching rules and drum-buffer-rope in a recoverable manufacturing system. International Journal of Production Economy 1997;53:101–16. Guide Jr VD. Production planning and control for remanufacturing: industry practice and research needs. Journal of Operations Management 2000;18(4):467– 83. Ijomah WL, McMahon CA, Hammond GP, Newman ST. Development of design for remanufacturing guidelines to support sustainable manufacturing. Robotics and Computer-Integrated Manufacturing 2007;23:712–9. Klussman K. Just-in-case:the land of remanufacturing. In: Annual International Conference Proceedings – American Production and Inventory Control Society; 1990, pp.9–65. Lund RT. Remanufacturing: the Experience of the USA and Implications for the Developing Countries. World Bank Technical Papers 1984:31. Lund RT, Hauser WM. Remanufacturing—An American Perspective. In: Proceedings of the 5th International Conference on Responsive Manufacturing- ICRM2010Green Manufacturing; 2010. p. 1–6. Lund R, Skeels F. Guidelines for an original equipment manufacturer starting a remanufacturing operation, Government Report, DOE/CS/40192, CPA-86-8. Cambridge,MA: Massachusetts Institute of Technology, Center for Policy Alternatives; 1983. OTA, Green products by design: choices for a cleaner environment, OTA-E-541,Office of Technological Assessment, Washington, DC, 1992. Paton B. Market considerations in the reuse of electronics products. IEEE Int Symp on Electronics and the Environment. New York: IEEE; 1994. pp. 7–115. SAE J1693. Remanufactured hydraulic master cylinder for motor vehicle brakes—general characteristics and test procedure. SAE J1694. Remanufactured hydraulic master cylinder for motor vehicle brakes—performance requirements. SAE J1890. Performance assurance of remanufactured, hydraulically-operated rack and pinion steering gears. SAE J1915. Recommended remanufacturing procedures for manual transmission clutch assemblies. SAE J1916. Engine water pump remanufacture procedures and acceptance criteria. SAE J2073. Automotive starter remanufacturing procedures.

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