Automobile

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Automobile industry in china

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Joint Ventures in Automobile
Industry

Automobile Industry in China
• The largest in the world measured
by automobile unit production
since 2008.
• Automobiles in China exceeds
that of the European Union or that
of the United States and Japan
combined.
• Of the automobiles produced,
44.3% were local brands e.g. BYD,
FAW Group, SAIC Motor
• The rest were produced by joint
ventures with foreign car makers
e.g. Volkswagen, General Motors,
Hyundai
Source:
Wikipedia-Automotive industry in China, Last accessed on 2

Chang'an Avenue in Beijing
nd

Joint Ventures in Automobile
Industry
• Beijing allowed foreign carmakers to setup shop in China in early 1980s.
• The joint-venture policy in China allows foreign manufacturers to
collaborate with one or two Chinese auto companies
• No foreign entity could own more than half of the rights to a JV with a
Chinese firm. The norm was for the Chinese partner to hold a 51% majority
• Chinese state’s terms of engagement with foreign entities was designed to
ensure that China would be the main beneficiary of their activities in the
country rather than anyone else.
• First JV was incorporated in 1983 between the American Motors Corp. and
Beijing Automotive Works.
• By 2003, almost all of the world’s leading automobile producers had
opened a JV production facility in China.
Source: Article on ‘The Role of the Joint Venture mode of Foreign Direct Investment in the development of the Chinese automobile
Industry’

Chinese Auto Makers: JointVenture Junkies?
• The six leading SOEs anointed by Beijing to lead in cars today
account for a pitifully low 2% of China’s car market.
• Younger, less experienced local national employees
• Chinese brands have suffered tremendously at home because
of quality issues and foreign brands are perceived by the
Chinese consumer to be of much higher quality.
• Stunningly crowded Chinese automaker field (120+).
• When Brilliance China Automotive Holdings Ltd. tried to
export its BS6 sedan to the European market in 2007, the
vehicle earned only one out of five stars for safety by the
German auto association Allgemeiner Deut.

Volkswagen in China (Volkswagen
Group China )
• Largest foreign carmaker (1.8 m in 1st half
of 2014)
• Volkswagen Group- 16 subsidiaries in China,
with SAIC, and FAW being the two major
Chinese partner companies.
• Sales are increasing with a CAGR of 5%.
• Gained ‘Pioneer status’.
• Strong nation-wide dealer network (3000+).
• Localization process of all the popular
models (Santana)
• Cheap without compromising on comfort
and safe.
Shanghai Volkswagen- Santana
• Environmental problems were taken into
Source:
Article on ‘THE IMPACT OF GLOBALISATION ON THE CHINESE AUTOMOBILE INDUSTRY: POLICY ASSESSMENTS AND TYPOLOGY OF
consideration
STRATEGIE’ by Chunli Lee,

India and China

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