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A Double Diamond Comparison of the Automotive Industry of China, India, and South Korea Marc Sardy
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Follow this and additional works at: http://scholarship.rollins.edu/as_facpub Part of the International Business Commons Published In Sardy, M., & Fetscherin, M. (2009). A Double Diamond Comparison of the Automotive Industry of China, India, and South Korea. Competition Forum, 7(1), 6-16.
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COMPARING THE AUTOMOTIVE INDUSTRY FROM CHINA, INDIA AND SOUTH KOREA: AN APPLICATION OF THE DOUBLE DIAMOND MODEL Marc Sardy, Department of international Business, Rollins College Marc Fetscherin, Department of International Business, Rollins College
Recently China became the third largest automotive producing country in the world next to the U.S and Japan. South Korea is the fifth biggest automotive manufacturing country and India has more recently emerged as one of the top ten automotive manufacturing countries. This paper compares industry competitiveness of these three emerging automotive manufacturing countries by using the Double Diamond Model which is based on Porter’s Diamond Model. Our results show that the Chinese automotive industry is as competitive as South Korea’s factor conditions, demand conditions, related and supporting industries as well competitive rivalry. By contrast, India is less competitive.
Keywords: Competitiveness, Diamond Model, Automotive Industry, China, India, South Korean. INTRODUCTION Auto manufacturers from China have made no secret of their intention to compete in the global automobile market. With about 8.6 million vehicles (6.4 million cars) produced in 2007, China has already surpassed Germany in number of cars produced and is now the third largest automotive producer in the world behind Japan and the United States. The Chinese automotive industry is highly fragmented so far with more than 100 car manufacturers, ranging from small local producers to large national corporations having multiple joint ventures (JV’s) with foreign companies (Fetscherin and Sardy 2007). However, the industry is dominated by five major companies (FAW, SAIC, Dongfeng, BAIC and Changan) all of whom have JV’s with foreign partners and together control almost 70% of the market (it is expected that further consolidation will happen leading to greater efficiency). Most cars are currently produced for the large, rapidly expanding, domestic market in China, but some Chinese companies are already exporting their cars or making foreign direct investment (FDI). In 2007, more than 413,500 cars were exported worldwide (Kurtenbach, 2007). In 2005 Nanjing Automobile Industry Corporation (NAIC) bought bankrupt MG Rover, the last independent car company in Britain, for over USD 90 million. NAIC now builds MG brand cars in China that are sold in the domestic market. However future plans include selling these cars in the European and U.S. markets through the MG/Rover network of distribution. The two independent Chinese automotive companies Chery and Geely have both announced plans to enter foreign markets (Alon et al 2008; Toncar and Fetscherin 2007). To pull that off, Chery for example, has teamed up with Chrysler. The two have struck a deal that will bring a Dodge-, Jeep-, or Chrysler-branded small car to US shores by 2009 or 2010. India’s automotive industry is also strong and...