Car Industry in China: Peugeot - Assignment Example

 The level of the duo in the car industry in China has been described as representing the level of the country’s economic development, which attracts colossal world attention. The following are the areas where diversification and integration have been explored in a very relevant way in its automotive dealings: China's car industry has immensely gone into increased outsourcing and bundling of more valuable chain activity in supply firms.

This is a way has increased trade while increasing the capability of the suppliers in the country. Another area of integration is the direct investment, global production, and cross border which lead to a dramatic boom in the sale of vehicles in the industry of Peugeot in China industry. China's car industry has embraced the aspect of carrying out the product design, production of most engines and transitions, and above all, they do the assembly of automobiles in the same facility. This is what they have diversified into and integrated into so that all is done under one roof.

This has come with its shortcomings. The concentration of highly integrated industries such as china industries tends to create a barrier to entry and limits the upgrading of smaller firms because of what economist term as cannibalization of smaller industries through integration and diversification of bigger industries (KNECHT, 2014, p. 57). COMPETITIVE ADVANTAGE Competitive advantage is what the China industry has in possession that is unique to other industries and acts as an advantage in the market.

Some of this uniqueness is natural while others are developed which give it an assortment of advantage to outperform other industries in the market. First, China has a huge population with considerable purchasing power, which helps it sustain its market even before they think of importing another model of the car for its internal market or exporting its own for the clients that need its make. This boosts the manufacturing of cars in this industry. Another area that the industry has tried to develop is the government coming in to help it develop a robust industry that can compete with other even stronger industries.

Most of the carmaker in China is mostly state-owned enterprises (SOEs), and the government usually provide the massive financing necessary to create a domestic giant. Here, the maintenance of car part tariffs at a higher notch than others encourages a setup of local and domestic part supply networks, which has placed the china industry in a critical position when it comes to marketing. Finally, there is a protectionism policy in the car industry of China. This has protected the industry from other more developed industries in countries such as Japan and Korea, which in themselves proved that the policy of government intervention can greatly contribute to a quick expansion of the export-oriented automobile industry.

The car industry of China is fully backed up by formal state industry policy for that matter since 1987 and then modified in 1994 to date. China has used this policy to regulate inward investment by screening, foreign equity limits, and local content requirements to narrow the technology gap (PENG, M. W, 2009) ABSOLUTE ADVANTAGE In the economy, this principle of absolute advantage is very important in industries that compete with other far much established and robust industries. In this principle, China's car industry, Peugeot, has been given the advantage to produce more cars and other products than other industries using the same resources as other competitors.

Most of the policies have evolved toward globalization to promote indigenous industries with the harmonized industrial organization but the car, industry getting the absolute advantage in that line (SKIN, & BOWEN, 2013). SUMMARY It has been seen that the car industry, Peugeot, to be precise has every advantage in every frontline that gives it a better placement in the market to get worldwide attention. In its tact, it has employed the framework of Adaptation, Aggregation, and Arbitrage (AAA), Porter 3 generic strategies (cost leadership, differentiation, focus, and hybrid).

In addition, it has employed a lot of diversification and integration that has increased the product on the market. China's car industry in its frontier has also enjoyed the competitive advantage of the high population it enjoys across the globe and protectionism policies.