The Opportunity of China's Auto Industry under the Hollowing Trend

Since the 1970s, multinational corporations have increasingly become the mainstay of the global economy. They rank the national GDP and corporate sales together, and they can be ranked 20th in the ranking table of global countries and companies. After the 1990s, with the emergence of more offshore outsourcing, strategic alliances, and virtual companies, a new feature of transnational corporations' operations was "hollowing out," that is, a large number of businesses were stripped. The main body of the company is opened to the outside companies through various forms of networks and alliances. Like the traditional auto industry and parts companies, such as Delphi and Visteon, they were separated from the entire vehicle company General Motors and Ford.

"Hollowing" means the reintegration of the value chain. From the perspective of input-output structure, the value chain includes raw materials, product production, wholesale and retail sales, sales to end consumers, recycling and other links; and from research and development- From the perspective of output structure, the value chain consists of research and development, product design, product production, testing, and sales. "Hollowization" refers not only to the separation of raw material production, product manufacturing, wholesale and retail, and customer service within the company, but also to R&D, product design, production, sales, etc. The links were separated. The latter kind of “hollowing” has more prominent effects on the pattern of division of labor among enterprises and the competitiveness of enterprises. Rover’s bankruptcy is unable to cope with this emerging trend and cannot reduce the cost of participating in international competition.

"Hollowing" also means that the adjustment of competitive forces means that opportunities for Chinese companies, such as Hon Hai in Taiwan, have seized the "hollowing" trend of the PC industry and become the world's premier PC business.

At the same time, with the "hollowing out" is a large number of excess capacity in many manufacturing industries around the world, which laid the foundation for the Chinese companies to split the acquisition of assets of international companies, such as Lenovo's acquisition of IBM's PC department, SAIC and SAIC respectively. Carve out Rover's production line and new model design.

At present, many auto parts companies in China have seized the opportunity of “hollowing out” by multinational corporations and actively participate in the international division of labor. For example, Shuguang has obtained a large number of international orders in the industries such as Cheqiao and Wanfeng in aluminum alloy wheels. development of. However, in the vehicle industry, it has become a heart issue for Chinese companies because it is the core area for multinational companies to control and the fastest value-added area in the value chain. In any case, “hollowing out,” the areas where core values ​​of multinational companies will not be abandoned.

At present, there are three strategies for Chinese vehicle companies:

First, gradual expansion type. The above steam and FAW are represented, through various joint ventures to develop and expand supporting systems for parts and components, accumulate R&D experience, and gradually enter the stage of independent innovation;

Second, the benchmark model. With Chery and Geely as the representatives, through the imitation of the popular models of multinational corporations, they will use the low cost of global parts and components to quickly enter the market and win opportunities.

Third, wake up catch-up type. As a state-owned company, Nankai is determined to make big investments in cross-border purchases driven by government forces, but Tacit Knowledge, which can absorb the assembly line, will be a great challenge.

The best of these three strategies can ultimately be attributed to how Linkage transcends the value chain of transnational corporations, how to actively leverage global resources, and quickly develop their capabilities through learning. 3L enhances international competitiveness.

Mike W. Peng, chief global strategy professor at the School of Management at the University of Texas at Dallas, believes that the biggest risk in China's auto industry comes from the prevalence of local protectionism. Peng Weigang suggested that Chinese state-owned enterprises that have acquired Rover’s assets should quickly establish a global perspective. Since they have acquired global brands and their assets, they should actively use various global industrial resources to abandon “Shanghai” and “Nanjing”. The narrow regional awareness of local brand development, such as “Beijing”, should be the first and most urgent step.

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