China Auto Industry

RACE TO THE GREAT WALL: COMPETING IN THE CHINESE A... Auto Market In mainland China March 2006 MONDAY, MARCH 06, 2006 RACE TO THE GREAT WALL: COMPETING IN THE CHINESE AUTOMOBILE INDUSTRY Qingjiu (Tom) Tao (Lehigh University) The Red-hot Market For automakers seeking relief from a global price war caused by overcapacity and recession, China is the only plucky in town. With just eight vehicles per 1,000 residents in China as contradictory to 940 in the United States and 584 in Western Europe there seems to be plenty of growth opportunities. Not surprisingly, nearly every major auto company has jumped into China, quickly turning the country into a new battleground for dominance in this global persistence. Chinas automobile take volume reached 3.25 gazillion units in 2002, a 38.5% extend over 2001. This increase represents the first growth peak in the olden 10 years (see Exhibit 1). Of these 3.25 million vehicles, passenger car production numbers surpassed the one million mark for the first time and reached 1.09 million units, a 55% increase over 2001. The year 2003 was another dainty year in the development of this industry, with sales up 75% compared with 2002. Reports of record sales, new production, and new venture formations were plenty.

After Chinas accession to the World Trade Organization (WTO) in 2001, the industry has been advancing by leaps and bounds. At the global level, China has travel to the fifth position in production foot the United States, Japan, Germany, and France, and is slated to take a crap 3.8-4 million vehicles in 2004. Already the third largest car market, China whitethorn surpass Japan as the second largest market (only behind the United States) by as early as 2007. Because the Chinese government does not approve wholly owned subsidiaries for foreign carmakers to live in the country (even after the WTO accession), foreign firms have to set up joint ventures (JVs) or licensing deals with domestic players. By the... If you want to get a full essay, order it on our website: Orderessay

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