Chinese FDI in the European Automotive Sector

Abstract

The automotive industry is one of the world’s most dynamic sectors in terms of the international reorganization of production. Until the 1990s, only the largest car manufacturers from industrialized countries expanded abroad through foreign direct investment (FDI), both in other developed and also in developing countries. Car producers from developing countries used to serve mainly their domestic markets or other developing countries. Within this scenario, the Chinese auto industry has rapidly and massively internationalized compared to other emerging countries. In less than half a century, the Chinese auto industry has become the world’s largest, with over 13 million vehicles produced in 2010 (over 18 million including commercial vehicles, buses and other vehicles). Considering that the bulk of production, between the 1950s and the early 1980s, consisted of military and commercial vehicles, and that production did not reach one million units at the end of the 1990s, the sector recorded an impressive rate of growth.