Chinese automotive companies: Jumping over the Great Wall
Type de publication:Conference Paper
Source:Gerpisa colloquium, Paris (2011)
In 2010 China became the largest automotive market in the world, leaving America, Japan and Europe in its wake. The last ten to fifteen years have witnessed a phenomenal growth in China's car producing capacity with many firms currently addiing to or intending to add to capacity to the extent that it has been argued that already the Chinese industry is beginning to show strains of excess capacity.
The Chinese government has made it clear that by the decade 2020-2030, it hopes to capture a global market share of 10 per cent beyond its own borders., which in itself presents an interesting challenge. As part of this 'grand strategy' the government has long encouraged joint venutres with foreign multinationals drawn from Europe, the United States, Japan and more recently Korea. Moreover, since the late 1990s, the Chinese government has encouraged the growth of newer, small firms such as BYD, Great Wall, Brilliance China, Geely and Chery. Whether entirely independently, municipally or state owned, thee firms have begun at the bottom end of the market and are gradually expanding their way into the upper market segments by producing medium and large cars. Lastly, all of them harbour ambitions to penetrate international markets either through direct exporting or by aqcuisition as SAIC has done with MG Rover of the UK or Geely with Sweden's Volvo.
The above strategies are not entirely the result of market forces at work, but are the result of geo-politically motivated government policies aimed at securing a Chinese owned insdustry rather than one dominated by foreign multinationals as is the case in the United Kingdom. To the Chinese then ownership of assets is of paramount importance.
The above described a high level of ambition on the part of both the national government, but not all firms accept this, recognising the fact that they are ill-equipped to challenge the established multinationals and so have turned their face inwards to concentrate their efforts on developing the emerging domestic market, especially in West China, where car ownership is extremely low.
The function of this paper is to assess how well those Chinese firms with international ambition have progressed over the past five years in preparing themselves for the global challeneges that lie ahead. For example, the deficiencies exhibited in Chinese cars are well established and not helped by low levels of intellectual property ownership among Chinese firms. This means that for the forseeable future many Chinese firms will still depend heavily on their Western partners for technical know-how and cutting edge technologies.
Essentially the paper will focus on dealing with a number of key questions that examine just how Chinese firms are trying to overcome their technical and organisational handicaps that are bound up with the industry's structural problems, the continuous divergence in aims between the national and provinical governments and the aims of the firms themselves. in relation to government polcies aimed at rationalising the industry and achieving a more realistic allocation of resources to achieve maximum efficiency.
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