Future International Business Strategy of Chinese Automotive Manufacturers

Abstract

Since 1955, when new China began to reconstruct its automotive industry, and for a long time after, Chinese car exports consisted mainly of commercial automobile products (chassis and finished vehicles, etc.) which were exported in small quantities by state-owned manufacturers. Since 2000, however, with the emergence of independent automobile manufacturers, the number of vehicles exported has increased rapidly, and the makeup of exports has shifted gradually from a focus on commercial vehicles to a focus on passenger vehicles. With regard to overseas expansion, manufacturers’ market access strategy has led to the rapid transition from parts trade to local knock-down manufacturing. However, despite the rapid progress of foreign expansion, problems have arisen due to insufficient risk management know-how with regard to foreign expansion on the part of independent Chinese manufacturers, and the fact that their experience acquired from domestic markets is not applicable to overseas markets. For these reasons, following a period of prosperous overseas expansion, some Chinese automobile manufacturers have been forced to withdraw from one market or have chosen to switch to another market. This entire process, from rapid prosperity to quick decline in Chinese automobile exports, is dramatically observed in the case of their overseas operations in the Russian market. This paper, then, focuses on the burst of growth in Chinese automobile exports around the year 2000, taking the Russian market (the most significant case with regard to the characteristics mentioned above) as a case study to analyse both the domestic and external reasons for this surge, and to investigate the mistakes in manufacturers’ overseas expansion strategies which led Chinese automobile exports from rapid prosperity to quick decline.