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Need an argumentative essay on Future of auto industry in China. Needs to be 6 pages. Please no plagiarism.Download file to see previous pages... 1). The extraordinary growth has made the automaker to
Need an argumentative essay on Future of auto industry in China. Needs to be 6 pages. Please no plagiarism.
Download file to see previous pages...1). The extraordinary growth has made the automaker to struggle in keeping up with the demand by running their factories non-stop, ignoring regular maintenance, and paying costly overtime. The sudden sales surge has made it hard for the manufacturers to make future plans for their factories in order to meet the demand (Delsack &. Associates 1). The rapid expansion of the automotive industry holds enormous potential in China. It is projected that it will take China 10 to 20 years to compete effectively in manufacturing, sales and vehicle design in the world. This is according to the University of Michigan Transportation Research Institute (UMTRI) and IBM Institute for Business Value (UMTRI 1). Industry Background In 2005, China became the world’s second largest automotive market. production and sales of the automobiles reached 5.85 and 5.75 million units respectively “overtaking Japan to become the second largest automotive market in the world” (Deloitte 12). 9 percent of the total volume of the global automobile sales and 23 percent of the world automobile market growth is represented by China (Deloitte 12). The fastest growing automotive segment in China is the passenger vehicle segment. The segment is characterized by an increasing share of the total market and the segment is the main driver of growth. The rapid growth has offered growth and development opportunities for the domestic brands and it has resulted into a more fragmented market. The growth of the automotive components and parts segment in China is also significant (Deloitte 13). The proportion of the components and parts companies in the Chinese automotive segment has also significantly increased. In the year 2005, the sales of the automotive components and part reached close to 40 percent of the industry’s total. The growth has been attributed to. (a) the historical integration of the automotive organizational structure change and the gradual increase of the share of outsourced subcomponents, (b) the consumer’s demand for a wide range of products and the expectations for addition of more value, and (c) the shift of attention to China by the global automotive components and companies [majority of these global companies are entering or intensifying their investments in China] (Deloitte 13). Auto Industry Challenges In the recent years, China’s car industry has boomed significantly. The effects of the exponential growth or the boom is catching up with the Chinese dealers, consumers, foreign firms looking for market share in China, government, suppliers, and manufacturers. There are a number of challenges affecting the auto industry in China and they include adverse traffic problems in the cities, higher demand for oil, defaults on the auto loans, uncertain associations with the joint venture partners, and higher pollution levels (UMTRI 1). The Chinese government is supposed to determine the means to control the auto economy without affecting the domestic suppliers and manufacturers or the auto industry environment. The Chinese government had hopes of acquiring expertise quickly by making sure that the Chinese auto companies owned more than 50% of any joint venture made. However, the technology transfer has failed and this is in part due to the foreign automakers concern about the intellectual property rights.
