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Ascertaining its future path. Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion Brief background.

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Presentation on theme: "Ascertaining its future path. Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion Brief background."— Presentation transcript:

1 Ascertaining its future path

2 Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion Brief background

3 3 parties- SOEs, Private Chinese Automakers and Foreign Automakers Requirement of foreign automakers to form JVs Structure of Industry Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

4 JV Main Structures Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

5 Share of Factory Units

6 Future of the Industry Continued reliance in JV s with foreign automakers Increased independence of local automobile brands Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

7 Research Question Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

8 Significance of our question Local Automotive Manufacturers Equity Investors Foreign Automakers Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

9 Our Thesis Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

10 Market Forces Our Approach The Chinese Automotive Industry will see an increased independence of local automakers Market Forces Analyze Investors Local firms Foreign firms Current Government Policies Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

11 The first step in arriving at our Thesis:

12 1) JV Regulations 2) Consolidation of the Industry 3) Independent Innovation 4) Global Expansion Market Forces Governmental Policies Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

13 JV Regulation Various restrictions Recent technology transfer clause Elaboration Stance towards JVs becoming more hostile Wants to shift away from reliance on JVs Significance Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

14 Consolidation of Industry Aims for 2-3 large scale VMs by global Chinese hybrid/electric vehicle players Elaboration Creation of a few strong domestic players Increasing competitiveness of independent firms Significance Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

15 Independent Innovation centred on green technologies Independent Innovation Active establishment of automotive institutes National project- “Electrical vehicles R&D and Commercialization Elaboration Knows that this is an opportunity to gain a lead Wants to be self reliant in this form of technology Significance Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

16 Going global: Expanding into foreign industries Global expansion Encourages domestic firms to expand through various means Recent ‘Acquisition Rage’ Elaboration An alternative way to develop independent firms, now that they have financial clout Significance Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

17 The Second Phase of arriving at our thesis:

18 1) Cost Management 2) Market Share 3) Brand Differentiation Market Forces Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

19 Cost Management Competitive Pricing Growing Strength of Domestic Car Makers Transfer of Technology Elaboration Better Quality Products Low Profit Margin Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

20 Chery Automobile’s Achievements Chery Auto led the way with 211% rise in profits BMW X3 selling for US$31,00 Chery’s equvalent model sells for US$15,000 Capturing a market share of 7.5% within 10 years Chery with its short history, currently ranks 4 th in the automotive industry in China Chery Example Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

21 Source taken from(E2A, 2010) Share Joint-ventures occupied 76% of the total market share of factory units Market Share Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

22 Share of the Mark Market Share of JVs Oligopoly Formed GM to set up a USD 250 mil Corporate Campus in China 25%of Volkswagen earnings come from China Elaboration Uphill task for local brands to break the oligopoly Eventually, JVs might continue to rule the industry Significance Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

23 Brand Differentiation Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

24 1) Domination over market forces 2) Emphasis on electric/hybrid cars Market Forces Weighing the Factors Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion Government Market

25 Challeges & Recommendations Challenges & Recommendations Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

26 Challenges & Recommendations Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

27 Limitations Limitations of our Research Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

28 China Foreign The Situation Now Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

29 ChinaForeign The Situation in Near Future Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

30 The Distant Future China Foreign Recap Developmental Paths Research Question Government Policies Market Forces Challenges Limitations Conclusion

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32 Bibliography  Alexander, J. (2010, Sept 22). Paul Tan's Automotive News. Retrieved May 20, 2011, from China wants foreign companies to disclose EV secrets:  AutomotiveWorld.com. (2010, Feb 22). China: New auto policy to be implemented in H Retrieved May 23, 2011, from AutomotiveWorld.com: policy-to-be-implemented-in-h1-of-2010  E2A. (2010). Understanding the Chinese automotive industry for Retrieved May 2, 2011, from Electro To Auto Forum:  Embassy of the People's Republic of China. (2008, Oct). Elderly Demographics. Retrieved April 2011, from Embassy of the PRC in the USA: embassy.org/eng/  Green Car Congress. (2010). Green Car Congress:China. Retrieved May 22, 2011, from Green Car Congress:  Holweg, M., Luo, J., & Oliver, N. (2005). A Value Chain Perspective. The Past,Present and Future of China's Automotive Industry.  International Organization of Motor Vehicle Manufacturers. (2010) Provisional Production Statistics. Retrieved May 11, 2011, from OICA, International Organization of Motor Vehicle Manufacturers:  KPMG Advisory. (2007). Momentum: Driving forces in China's car market. KPMG.  Luo, J. (2004). Research, Development and Demonstration of Hybrid and Fuel Cell Vehicles in China. International Motor Vehicle Program. Bibliography

33  Luo, J. (2005). The Growth of Independent Chinese Automotive Companies. International Motor Vehicle Program.  Luo, J. (2006). The Impact of Governement Policies on Industrial Evolution: The Case of China's Automotive Industry. Massachusetts Institute of Technology.  Roberts, D. (2008, January 4). China Autos: Chery Keeps Accelerating. Retrieved May 21, 2011, from Business Week:  Tang, R. (2009). The Rise of China’s Auto Industry and Its Impact on the US Motor Vehicle Industry. Congressional Research Service.  Tao, Y. (2010). The Way of Chery to achieve the most successful auto brand In China. Savonia (University of Applied Sciences).  The Economist. (2005, June 2). Cars in China: Dream Machines. Retrieved May 22, 2011, from The Economist:  Xinhua News Agency. (2006, December 11). A Review of China's Car Industry in Past five Years. Retrieved May 24, 2011, from China.Org.Cn:  Xu, B. (2006). Infant Industry and Political Economy of Trade Protection. Pacific Economic Review.  Ying, T. (2011, Jan 10). China 2010 Auto Sales Reach 18 Million, Extend Lead. Retrieved May 23, 2011, from Bloomberg: million-extend-lead-update1-.html  Zhengzheng, G. (2007, Dec 14). China Daily. Retrieved May 12, 2011, from Chang'an Motor Rolls out Hybrid: Bibliography

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