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The car industry in China (2008)

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  1. Introduction
  2. Characteristics of the Chinese market and its Strategy
  3. General Features of the Market
    1. Production and sales
    2. Imports and exports
    3. Builders: Clearly defined leaders
  4. Approach to the Chinese market
    1. Comparison of three strategies (European, Japanese and American)
    2. Strengths and weaknesses of the Chinese market
    3. Opportunities and threats of the Chinese market for foreign companies
    4. The negative consequences on the environment
  5. Outlook
    1. Regulatory aspects
    2. Political aspects
    3. The oil issue
  6. The world of China
    1. The basics in the industry
    2. Different strategies worldwide: EU and Japan Strategy
  7. Conclusion

In the current context of significant economic growth of China, with 2008 being a year when Beijing hosted the Olympic Games, it seems wise to focus on the country.

Indeed, it officially aims to give way to a spirit of conviviality around sports, but does not forget to attract as many people as possible to boost the economy, which is the main priority of the country.

On the other hand, the global automotive market tends to experience a significant turning point in terms of production and resources. Indeed, after an appearance in the countries of Eastern Europe in order to minimize production costs, European manufacturers have invested in the Chinese market in recent years. This is still limited by a conservative spirit of national authorities, but in no way alters the leadership of the manufacturers in the Chinese market.

Being an ardent admirer of the automotive world, and wanting to combine business with pleasure, I decided to conduct a study on these two subjects. Indeed, combining economics with my studies is the most effective way to achieve a final result and to find a niche market.

The figures and facts in this report are the result of extensive research, and focus in particular on the evolution of the Chinese market.

China has always been regarded as the land of the bicycle; the country where people cannot afford to travel by car. Today, the world sees it as a goldmine for the automotive industry. Indeed, in 2005, China became the third largest producer of automobiles after the United States and Japan. Thus, the total car production in China exceeded 4 million units for the first time in 2005. It is also the fourth largest market worldwide in vehicle sales.

Over time, it will be the largest world power in terms of automotive sales, which can be explained by the considerable potential of all the emerging markets it represents. Its huge population and rapid economic growth, especially its purchasing power, are two key factors. The car then became a separate entity in the country, a symbol of success and a revolutionary means of progress and economic development for the emerging middle class.

The automotive sector has become the third largest economic center in China in recent years. The strong growth and change in this sector in China represents one of the biggest and most evocative changes in world history in the automotive industry (38% growth in 2002 against only 1% in the rest of the world).

The Chinese automotive industry was composed of many small businesses and public institutions which were divided, and the technical powers were largely isolated from each other in the world economy. Moreover, the automotive industry in China is governed by several large state enterprises of the system, which are increasingly able to meet the demand of the country, which is constantly increasing. These companies currently export products to other countries.

The Chinese market is also characterized by its very large settlement of foreign manufacturers which are directly related to the industry and partly behind this amazing growth. In the current economic environment where all the major countries are trying to capitalize on the commercial potential of China's auto industry remains the perfect example of a successful and organized economic structure.

Several questions thus arise from this: what are the characteristics of this market emphasized by the opposition between local and foreign manufacturers? What future awaits the Chinese automotive industry?

Tags: car industry in China , evolution of the Chinese automotive market, EU strategy

[...] Imports are no less significant (lower tariffs, elimination of import barriers vehicles and parts).However, though China allows all imports, all major global automakers are already producing on its soil and the risk of massive imports is limited - Political aspects The Chinese authorities identified the main lines of evolution of the automobile industry in the Eleventh Five-Year Plan from 2006 to 2010 some time ago. The willingness of the major Chinese governments as part of these measures is clearly intended to encourage Chinese manufacturers to improve their capabilities of innovation, and deploy vehicles of which they own the intellectual property and brand. [...]

[...] The famous Carlos Ghosn, the CEO of Nissan, said during a press conference that the 300,000 vehicles produced in China are not for re-export to Japan, as the production costs are too high. Though the Chinese incomes remain relatively low, production costs and labor are so high that exporting from China is not profitable enough. Furthermore, Carlos Ghosn talks about the relocation of production in order to achieve the elimination of jobs that do not create value. HONDA Since 2006, the Japanese company Honda has invested nearly 150 million Euros to expand its production capacity in China, which accounted for more than 500,000 vehicles produced in 2006. [...]

[...] Besides, knowing that China is one of the most polluted countries in the world, the Automotive Industry and the Government had to deal with this issue. Now the Country gives much more importance to the development of clean and fuel efficient cars. Also, this measure will help the automotive industry enhance its continued growth. In numbers, this action represented the reduction of fuel consumption by 10% in 2007. Moreover, alternative fuel vehicles will be more present In the future, thus optimizing the country's energy consumption. [...]

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