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Competition in the Chinese Automobile Industry
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Brief
Competition in the Chinese Automobile Industry
In the late 1970s, Planned economy Market economy
China realized Chinese vehicles are needed to be replaced
Attractive FDI trough JV with foreign automobile companies
Volkswagen, American Motors, and Peugeot established JV in 1983 1984
Only approximately 20 JVs were established by the end of 1989
FDI flows into this industry started to accelerate sharply from 1992
The WTO entry in 2001 has further intensified the competition as government
regulations weaken.
The number of registered cars, buses, vans, and trucks on the road in China
reached 62million in 2009, and is expected to exceed 200million by 2020.
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Q .1
Competition in the Chinese Automobile Industry
Why do all multinational automakers choose to use FDI to enter this
I¡¦(»ý·«)
pected income
Little control over technology and marketing Low competitive advantage
Inability to react to turbulent market environment
Licensee Future competitor
What are the drawbacks of using other entry modes such as exporting
and licensing
Q .1
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Q .2
Competition in the Chinese Automobile Industry
Some early entrants(such as Volkswagen) succeeded, while some early entrants(such as Peugeot) failed. Similarly, some late entrants(such as Honda) did well and some late entrants (such as Ford) continue to struggle.
From a resource-based standpoint, what role does entry timing play in determining performance
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Q .2
Competition in the Chinese Automobile Industry
High fuel consumption
Difficult Maintenance
Expensive Parts
The market trends in 1980s
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Competition in the Chinese Automobile Industry
The early market entry
Q .2
VW reinvested profits
Refine production-`
focused on the consumers needs
¡°Santana 200