Building Competitive Advantage of Locations for Automobile Industry: Changchun as the Example Feng Han (Corresponding author) & Qiuhong Xi School of Management, Shenyang Jian Zhu University 9 Hunnan East Road, Shenyang, 130024, China Tel: 86-24-2469-2209 E-mail: firstname.lastname@example.org
Tingyu Ma College of urban and environmental science, northeast normal university Changchun 130024, China E-mail: email@example.com The research is financed by Liaoning Social Sciences Association of China. No. 2007lslktjjx-182 (Sponsoring information) Abstract A location must establish its own competitive advantages to meet the demand of global economy age, therefore, first, this paper brings forward the definition of competitive advantage of locations. Second, China is changing from industrial society to knowledge society, so the competitive advantage of locations for Chinese industries have the cross-characteristics of the two societies, which is globally representative. On the base of the deep influences of Transnational Corporations on automobile industry, the paper analyzes the competitive advantage of locations for automobile industry and points out the index system of that. Finally, it takes Changchun, in which there is the largest automobile enterprise FAW (First Automobile Works) in China, as the example to give out the way how to establish competitive advantages of locations. Keywords: Automobile industry, Competitive advantage of locations, Changchun In the global economy age, Transnational Corporations (TNCs) become the main economic subjects of the global economic action, so the location conditions are the key to attract the investment of TNCs. This paper considers that keeping and attracting industrial resources has been in the period of global competition for locations, and locations have to establish their own competitive advantages like nations. Locations should establish a new mechanism to improve and develop all kinds of conditions, to make them to promote and cooperate with each other, and enhance the integrated strength. Therefore, the paper brings forward a definition of competitive advantages of locations, which means the integrated strength of locations to attract and keep industrial resources in the global economy times. Locations should confine the contents of their competitive advantages according to their own industrial characteristics and conditions of external connection, and then bring forward the routes and approaches to establishing advantages. 1. The model of competitive advantage of location 1.1 The enlightenment of Porter’s theory of competitive advantage Michael Porter (2003) pointed out that locations can influence the competitiveness and the model of resources of local competitive advantage (see Figure 1). Therefore, the competitive advantage of location comes from the integrated and concerted development of four interlinked factors which are firm strategy, structure and rivalry, demand conditions, factor conditions and related and supporting industries, which have their own systems and are closely interconnected. 1.2 The enlightenments of the global location theory and the theory of industrial clusters Locations can not have all the related and supporting industries because of local relative scarce resources, so they must build their connection systems. The point of the global location theory is that cities should manage to become a convenient network node in the multi-polar and multi-level world system of cities and strengthen their industrial attraction (Guo, Rong chao, 2004). Therefore, locations need integrate their inside and outside by building sound connection networks, and win initiative in the location competition. The researches of clusters show that local 107
Vol. 3, No. 7
International Journal of Business and Management
capability to absorb knowledge and innovate makes the local advantage industries in long-term...