Analyzing the Competitive Forces of the Automobile Industry in Mainland China- Solution



(745 words)


According to facts about New York Times magazine China has become the largest Automobile market in 2009 with its high record of 19 million vehicles sold while in comparison there are only 10.43 million cars and other vehicle sold in the United States. These figures are in accordance with China Association of Automobile Manufacturers.

As we can see while the worldwide economic crisis affected the worldwide downfall, in automobile industry the mainland China experienced a tremendous twenty five (25) percent increase. Unbelievable during the first half of 2009 there are 6.1 millions of cars sold.  Accordingly it was during the year 2000 when the increase in sales in China begins to advance. The sales of cars eventually rise from 20 to 30 percent in recent years of 2000 to 2005. And still continues to grow till the present time.

China even surpasses their neighboring country including Japan which is the second largest car sellers of the world. The primary reason is the expansion of major roads and highway so as street widening in other areas that causes the uprising trends in car sales. Eventually the Chinese government has been very supportive in car industry since they provide economic stimulus that will provide tax cut off and subsidies for car users that only use fuel efficient engines thereby cleaning the air for a healthy atmosphere. In effect car producers take advantage of this promotion to gain more market shares and they are reluctant about this law since it will give additional advantage to customers economically.

According to General Motors makers of quality cars like Buick and Chevrolet that the size of the market of China in car sales can reach up to twice as much of the United States if the car sales continue to rise before 2020. Talking about world class competitive advantages there are many reason why China has expectedly reach this highly prestigious car sales industry because of the following reasons:

  • China consists of local manufacturers but they have adopted international standard and they have partners in well established international companies. Parts and other accessories are easily distributed and imported from other countries especially in neighboring countries.  They have easily updated their manufacturing technology from exchange process of distribution.
  • China has an extensive labor forces that are paid cheaper than any other country and they have a lower cost of research and development breakthrough. The maintenance in safety and emission testing is much lower than of the United States and other countries.
  • China introduced their fuel economy regulation for customer protection and to take care of their natural resources.

Since all the above caters to lower cost of production these are all the reason for quality production and material acquisition and not focus heavily on expenses division and labor force problem. In continuous effort to become the market leader and establish an international recognition, the Chinese government helped them promote consolidation in car industry so as to benefit technological advantages in worldwide distribution. Local companies like Changsan Automotive, Shanghai Automotive Industry Group (SAIG), China FAW Group, Dongfend Motors are encouraged to share their technology.

In other countries just like in some parts of United States and other European nation, one of the biggest problems they have encountered in penetrating these areas was that they have not given a safety standard in emission and testing, they are required more innovation and safety features to be accepted. European market has somehow doubted their production quality. In fact most of the Chinese product from food, clothing and technology has been doubted to fraud and counterfeiting acts. This has been their disadvantages in other countries in distributing their products worldwide. However they have penetrated their distribution in Middle East, African and Asian neighboring countries.

On the other hand China has not just been the best in car sales they are also the largest producer in Electric Motors and auto parts the second largest producers in electric batteries next to Japan. China is also quickly becoming a major tire producer.

Just like in Japan the introduction of Electric Car has been in their mind to be introduced in the coming years but up to now it only has a limited manufacturing capability and it is still in research and development process. So as to improve economic condition and save the earth, the government took pride in this challenge to become one of the largest distributors of Electric Cars in the years to come.