Through opening China's car market to the outside world in the early 1980s, the government then hoped the domestics could learn from their global competitors and eventually become global players themselves.

That didn't happen. But the open-door policy has produced another result, That is; the formation of a global supply base within China as nearly all major international auto parts suppliers have built their facilities here.

An increasing number of domestic Chinese automakers are now tapping into this supply base in their effort to move upscale. And this trend has never been so obvious as this year.

The most noticeable example is Zhejiang Geely Holding Group. In late August, it put on sale the first model under its newly created Emgrand sub-brand.

The new car, a three box sedan codenamed EC718, is priced from 82,800 yuan ($12,123), much more expensive than Geely's existing models which sell mostly for less than 70,000 yuan ($10,249).

How can Geely convince the consumers that the car is worth the price? Well, as Geely says in the car's promotional materials, one only needs to see who the suppliers are.

Geely itself developed the engine. But international companies supply all other major parts of the car. The engine control unit comes from Delphi Corp, the braking system from Robert Bosch GmBH and the lighting system is from Valeo SA. Seats are from Lear Corp and Visteon is supplying the instrument panel.

Geely says that by sourcing from the world's leading auto parts suppliers, it aims to build a "world quality" car to upgrade its image from a maker of "affordable cars for ordinary people" to one that pursues the development of "the safest, the most fuel efficient and most environment-friendly cars".

Geely is not alone as a domestic Chinese automaker making heavy use of the global supply base to upgrade its products.

At the Shanghai auto show in April, Great Wall Motor Co. touted all-aluminum engine blocks supplied by Georg Fischer Automotive AG as a selling point for its newly developed sedans.

In July, Dongfeng Motor Corp., a leading domestic commercial vehicle manufacturer, started selling its first own brand car. The three-box compact sedan comes fitted with a gasoline engine and manual transmission from PSA Peugeot Citroen SA or an automatic transmission from Aisin Seiki Co. 

To what extent can these companies benefit by shifting their sourcing from local to international suppliers?

Global suppliers offer better quality. But they also charge more for their parts than domestic suppliers. The weak brands of domestic players give them limited pricing power.

In the short term, then, more purchasing from international suppliers can only add to the production costs of domestic automakers and hence eat into their profits.

But from the long term perspective, it is a price they have to pay. Better products and stronger brands can't be achieved unless an automaker is willing to make a significant investment in parts.