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2018 | Book

Variety of Development

Chinese Automakers in Market Reform and Globalization

Author: Dr. Qiushi Feng

Publisher: Springer Singapore

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About this book

This book examines China, the world's largest auto market since 2008 and the story of how Chinese auto-makers developed is the story of the Chinese economy in microcosm. It focuses on China's systemically important automobile sector, this book reveals how local institutions have moderated structural changes at national and global levels, and consequently generated significant organizational diversity in the production sphere.This book begins with the intriguing observation that individual Chinese car makers have been evolving in different directions despite a shared context; what factors led to these diverse choices and positioning? It is the central aim of this book to explain the variety of institutional forms used by Chinese car manufacturers in navigating the market transition and answering the challenges posed by globalization.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
This chapter lays out the general framework of the book. It opens with a review of China’s rapid rise in the world automobile industry over the last three decades, and then focuses on the significant variations among Chinese car manufacturers as regards production organization. Four production models are distinguished by ownership structure and technological strategy, and a research question accounting for the developmental variety of Chinese car assemblers is suggested. Various theories are examined through a review of the literature and an institutional perspective is proposed as the explanation, arguing that national economic positioning, a historical arrangement of the Chinese central government under the planned economy, has led Chinese carmakers along different pathways and caused the variety in the organization of automobile production. The rationale for the case selection is introduced at the end, with a brief synopsis of following chapters.
Qiushi Feng
Chapter 2. FAW, “Senior Son” of the Chinese Automobile Industry
Abstract
This chapter is about First Auto Works (FAW), the oldest automobile enterprise in China, which exemplifies enterprises owned by the central government and producing foreign-branded cars through joint ventures. The chapter attributes FAW’s development to the leading role of central government in the local automobile sector. In the era of the planned economy, the central government had built up the northeast region as the national heavy-industry base, and FAW as the key enterprise for automobile production. When the market reform started, though the central government relaxed its control over many enterprises, it maintained a tight hold on FAW, which became a critical element in the reform. Under central government direction, FAW was gradually transformed from a state factory into a state-owned corporation and assigned to practice the new industrial policy, which was to promote import substitution and technological upgrading through joint ventures with foreign corporations. The FAW production model was thus determined under a series of national initiatives.
Qiushi Feng
Chapter 3. SAIC, a Giant of the Domestic Market
Abstract
This chapter focuses on the second production model. Shanghai Automotive Industry (Group) Corporation (SAIC), currently the largest Chinese carmaker, is owned by the Shanghai municipal government and has established two joint ventures with Volkswagen and General Motors. In this chapter, the development of SAIC is charted as a process manipulated by a strong local government sponsored by central government. Under the communist regime, Shanghai used to be the national economic center of China and its local officials carried substantial political weight with the central administrators. However, after the reform, Shanghai was asked to hold back as a safety measure to reduce risks in the national reform. Soon after the ending of these restrictions in the early 1990s, local officials chose carmaking to revitalize the local economy. Following strenuous lobbying, the local initiatives were finally approved and supported from above. In particular, the idea of establishing joint car production ventures received unprecedented acknowledgment from central leaders, despite its political sensitivity. In sum, the developmental pathway of SAIC was primarily shaped by a strong local state with critical endorsement from above.
Qiushi Feng
Chapter 4. Chery Auto, Champion of National Brands
Abstract
This chapter uses Chery Auto as a case study for the third production model. Chery Auto, a national cars champion, is owned by the local government in Anhui province. In the communist era, Anhui’s role was to assist the industrialization of other areas such as Shanghai by contributing raw materials. When the reform allowed them to pursue their own economic goals, local officials in Anhui, long neglected by central administration, had ambitions plans for industrial projects such as carmaking. Such ventures were officially prohibited, however, by the central authorities, which considered them a threat to the industrial concentration of the national automobile sector; and Chery Auto was finally born as a “local secret” without the central administration being informed. The central–local conflicts and compromises eventually led Chery Auto along the path of making cars independently, without any foreign partners.
Qiushi Feng
Chapter 5. Geely Auto, Pioneer Grassroots Automaker
Abstract
This chapter focuses on the case of Geely Auto, a national carmaker originating in Zhejiang Province, also the most successful private carmaker in China. Geely Auto’s production model is based on a grassroots carmaker’s relentless struggle for survival in the face of central authorities’ regulations. With its barren land and a border with Taiwan, Zhejiang had long been neglected in national economic planning in the pre-reform era, giving rise to an active private economy since the market reform. Taizhou, a city in Zhejiang with a unique local industrial culture featuring machine making, became the birthplace of Geely Auto. However, as this type of spontaneous car production violates central regulations on industrial concentration, Geely Auto had to find its way towards a legitimate status in the market independently without any foreign partners.
Qiushi Feng
Chapter 6. Conclusion and Discussion
Abstract
This final chapter draws conclusion after a summary of main empirical findings. It first summarizes the four empirical cases, pointing out that the four car projects could be traced to the historical economic positioning of their home regions under the communist regime, and the associated local political structure and configuration of developmental ideas in the market reform. The chapter then concludes that the institutional perspective provides convincing explanations of how the Chinese carmakers organized production differently against a larger canvas of transitional economy and globalization. Some limitations of the study are discussed, with particular reference to new trends in the Chinese automobile sector in recent years. At the end, theoretical implications of this book are discussed, especially those related to market transition and globalization.
Qiushi Feng
Backmatter
Metadata
Title
Variety of Development
Author
Dr. Qiushi Feng
Copyright Year
2018
Publisher
Springer Singapore
Electronic ISBN
978-981-10-5912-4
Print ISBN
978-981-10-5911-7
DOI
https://doi.org/10.1007/978-981-10-5912-4