19-08-2013, 04:46 PM
Competing in Chinese Automobile Industry
Competing in Chinese.pptx (Size: 262.7 KB / Downloads: 15)
Introduction: Chinese Industry
There was just 10 vehicles per 1000 resident in china in 2006.
The world’s top 100 auto part supplier 70% have a presence in China.
China vaulted past Japan in 2006 to become a world no 2 market.
China has moved to third position in production behind US & Japan.
FDI in the Automobile Industry
China’s road were largely populated by inefficient, unattractive, and often unreliable vehicles that needed to replaced.
Attracting FDI through JVs with foreign companies.
WTO entry in 2001 has further intensified the competition as government regulations weaken.
Volkswagen
VW in 1984 entered a 50/50 JV with SAIC to produce Santana Model using CKD kits.
VW was selected to set up a second JV with First Auto Works in 1988.
VW allowed FAW a 60% ownership stake in its JV in 1990.
VW’s passenger car market share dropped from over 70% in 1999 to 39% in 2004.
Peugeot
It started to search for JV partners in 1980 and in 1985 setup a JV, Guangzhou Peugeot, in south China.
JV mainly produced Peugeot 504 and 505 models of 1970s.
In 1991, Guangzhou Peugeot accounted for nearly a 16% share of domestic passenger car market.
In 1997 loosed $349 million and sold JV to Honda in 1998.
Return in 2003, PSA Peugeot Citroen its partnership with Dongfeng Motors turned out car models for domestic consumer, including Peugeot 307
Emerging Domestic Industry
In 2006, domestic companies controlled some 27% of domestic market.
Become master at controlling costs and holding price down.
Chery exports cars to 29 countries.
Geely Group obtained its license in 2001.
Geely produces 180000 a year with various models of sedans and sports cars.
Conclusion
Domestically, China third biggest auto market.
Internationally, Chinese brands are exporting, in introduction phase PLC
Quality issue can be solve
Brand one key challenge
Consumer perception key
Parallels to Japan and South Korea
Independent more likely to export.