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Automobile industry in China (2005)

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  1. Introduction
  2. Market reforms create the conditions for the penetration of foreign companies
  3. The United Fruit Company against dictatorial regimes
  4. The emergence of a labor movement
  5. The 1929 crisis has affected the monopoly of the United Fruit Company
  6. Expectancy from 1944 to the coup of 1954
  7. Conclusion

China has been the largest automaker in the world, since November 2009. The automotive sector has become the third biggest economic hub of the country in recent years. The rapid growth and transformation of this sector in China is one of the greatest and most significant changes in automotive history. This sector saw a 38% growth in 2002, compared to the meager 1% in the rest of the world. It has now become one of the pillars of Chinese consumption.

The Chinese auto industry is dominated by several large incorporated state enterprises, which are able to meet the steadily growing demands of the domestic market, and are even exporting products to other parts of the world. The total vehicle output in China exceeded 4 million units in 2003, seven million in 2006, and eight million units in 2007.

In 2009, China manufactured 13.759 million vehicles, and surpassed Japan, to become the largest automaker in the world. China has become the new El Dorado for foreign car manufacturers including the General Motors group from the U.S, PSA Peugeot Citroen and Daimler Chrysler from Europe, and Toyota from Japan etc.

Does the arrival of these leading automotive manufacturers in the Chinese automotive market, favor its economic and social development? Has China's entry into the WTO made a difference? First, we will briefly discuss China's entry into the WTO, and assess its impact on the Chinese economy. Next, we will study the different strategies used by the major automotive groups of Europe, America and Japan.

Then, we will compare the global strategies, by comparing the strengths and weaknesses of each strategy. We will then try to identify the opportunities and threats of the Chinese market. Finally, we will evaluate the positive and negative consequences of the arrival of major automotive groups in the Chinese market. As part of our conclusion, we will make a synthesis of the ideas developed during our presentation, and will try to explain the various ongoing projects in the automotive sector, along with the anticipated impact on the Chinese economy.

With 9.60 million km2, China is the 4th largest in the world by its size, just behind the United States and ahead of Brazil. China has the longest land borders or 22,000 km. In terms of coastline, it occupies the 11th place with 14 500 km. On the other hand, most of China is in the northern temperate zone, with a warm climate and four distinct seasons. In China, the continental climate is punctuated by the monsoon.

With nearly 1.3 billion people, as many potential consumers, China is by far the most populous country, ahead of India and the United States.

However, China is a particularly complex market, bureaucratic and competitive. It is a country with its own characteristics, where the rules are different and should be known by countries wishing to do business in China.

Thus, the weight of public sector and the influence of Chinese policy on the economy of the country remain high. Indeed, political institutions can work on the finer points of the economy (trading around a nuclear power plant for example). However, although China is a communist regime, the practice remains capitalist.

Tags: China; economy; demography; automobile industry

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