Abstract
Chinese automobile production has been expanding. China produced 7.2 million vehicles in 2006 and became the second largest automobile market behind the U. S. However, China's automotive industry has two major deficiencies. One is a lack of original product development ability, and the other is a lack of export capability. This paper discusses how the Chinese automobile manufacturers introduce product development technology from foreign manufacturers.
Chinese automobile manufacturers who have a joint venture with foreign automobile manufacturers are trying to introduce product development technology from their partners through their joint business.
However, Chinese automobile manufacturers who do not have a joint venture are trying to copy the technology illegally. They decide on a foreign model to focus on, and then apply reverse engineering to that focal model. Reverse engineering means that they completely dismantle an original vehicle and make a draft for each part. Based on the drafts, they manufacture the parts and then assemble “copy” vehicles. Their manufacturing costs are lower than those of foreign competitors; however, in terms of product quality, their models are inferior.
Chinese automobile manufacturers are also trying to merge with foreign automobile manufacturers in hopes of acquiring their products and brands. However, these merger strategies tend not to proceed successfully because of various kinds of difficulties.
