The Automobile Manufacturing Industry in China - Essay Example

The Automobile Manufacturing Industry in China This study provided a comprehensive analysis of the automobile manufacturing industry in China. As the Chinese economy continues to experience phenomenal annual growth in GDP, many new firms are entering the automobile market. The growing Chinese middle class views automobile ownership as a status symbol much like Americans did post World War II. The research examined the competitiveness of the Chinese automobile industry utilizing Porter’s Five Forces and Diamond models. Based on the analysis provided by the models, the researcher predicts that China’s automobile industry will continue to grow over the next several years. Moreover, as the Chinese continue to invest significant capital in research and development as well as the acquisition of existing foreign-owned automobile manufacturing companies, it is clear that China has the potential to rival Japan as a global industry leader. The results from a survey administered to 100 randomly selected individuals from Beijing, China confirmed the hypothesis that China’s automobile manufacturing sector is positioned for considerable growth. Millions of Chinese with the financial means will be purchasing automobiles in the years to come. The Chinese government continues to invest in highway infrastructure in support of the anticipated growth in the number of automobiles. The large number of competitors in the Chinese automobile industry is welcomed news for consumers. The product variety and vehicle quality are both excellent and the fierce competition for customers will moderate prices well into the future. 5.1 Aim of the Research This final chapter draws conclusions from the research undertaken to test the following hypothesis: “There is a high degree of competition in China’s automobile industry.” 5.2 Research Strategy Primary research was conducted utilizing a self-administered questionnaire. The respondents were 100 randomly selected local residents of Beijing, China. This method was selected for several reasons. First, a self-administered questionnaire allows the researcher to collect significant amounts of data in a relatively short period of time. Second, the data are easily coded and analyzed. Third, this method is accepted for its high level of accuracy in drawing conclusions related to the research hypothesis. In addition to primary research, secondary sources were utilized to support the findings in this study. Chapter three provides a comprehensive overview of the research methodology. 5.3 The Findings In applying Porter’s Five Forces and Diamond models to the Chinese automobile manufacturing industry, the analysis is quite revealing. Utilizing the five forces approach, it is clear that Chinese automobile manufacturing firms do not enjoy a strong competitive advantage because there are so many companies in the market. The availability of product supply gives the consumer significant power over market prices given the large number of products from which to choose. The Diamond model, on the other hand, clearly shows that China is a nation poised to exercise a considerable national competitive advantage over automobile producers in other countries. The Chinese government is investing significant sums of money on upgrading and expanding the highway transportation infrastructure, the government is investing heavily in research and development into new technologies and the government has trillions of dollars available to support the development of China’s automobile industry’s movement into a global leadership position. A SWOT analysis was also conducted. It revealed that the Chinese automotive manufacturing industry enjoys many strengths as well as opportunities to assume a leadership role in the global automobile manufacturing market. This is particularly the case in the area of emerging green technologies. The only threat of any significance is a potential major change in the Chinese government’s taxation or regulatory policies that may somehow impact consumer demand for cars. Otherwise, the future looks bright for China. The detailed analysis in chapter four utilized multiple theoretical business models in assessing the current situation with the Chinese automotive manufacturing industry. It is clear from each of the theoretical models that China is quickly becoming the standard for global success in the automobile manufacturing industry. A total of 100 local Beijing residents participated in the study. Seventy percent of the respondents stated their intent to purchase a new car within the next 12 months. The remaining 30% responded that they had no plans to purchase a new car within the next 12 months. Two major factors in the decision not to purchase a new car were financial considerations and the fact that some of the respondents already owned 2 of more cars. Based on both primary and secondary research, we accept the hypothesis that the Chinese automobile industry will continue to grow. Demand for automobiles will continue to increase as many Chinese with the financial capacity to purchase a car have yet to do so. The government will continue to expand its infrastructure to keep up with increase in demand for automobiles. However, the high degree of competition and rapid growth in the automobile industry is unlikely to be sustained in the long term. As the Chinese economy begins to overheat, the government will be forced to intervene by utilizing macroeconomic policies such a regulation to slow the growth in the economy. 5.4 Limitations 5.4.1 Bias This study is subject to both selection bias and measurement bias. The former concerns the selection of sample respondents who are not necessarily representative of the population as a whole. The latter refers to how the outcome was actually measured. These two types of bias affect all research and it is important that end users of the results be aware that research bias exists. 5.4.2 Misunderstanding Although it is possible that some of the respondents may have misunderstood the questionnaire, it is highly unlikely given the very simple, straight forward instrument that was used. In addition, the researcher was present when several of the questionnaires were actually completed. No misunderstanding on the part of the respondents was observed. 5.4.3 Number of Respondents A total of 100 questionnaires were completed and all of the respondents were from Beijing, China. A larger sample size is required in order to make reliable and valid generalizations to the population as a whole. Moreover, the sample would need to reflect the demographic characteristics of the Chinese population by including respondents from across the entire nation. Read More