Globalization of Chinese economy: the automobile industry.
A new social and economic order is fast emerging and seems to be engulfing the entire planet. These trends constitute what has come to be popularly known as the phenomenon of globalization. It can be conceived as a process that embodies a transformation in the special organization of social relations and transactions, generating transactional or interregional flows and networks of activity, interaction and power [Herman, 1999]. Globalization will greatly impact China in all aspects, particularly in automobile industry. The Chinese automobile industry, with the globalization of the Chinese economy, will face enormous problems. Some of the significant problems and possible solutions will be discussed in this essay, including three inner constraints and two outer challenges. The three inner constraints are problems of small scale and fragmentation, special treatment and regional protection, and concerns over air pollution. The two outer challenges come from China's entry into the World Trade Organization (WTO) and foreign direct investment (FDI). .
According to the China yearbook 2000, the number of privately owned vehicles was extremely lower than other developing countries. Wei [2002] states that at present there are reportedly more than 120 firms in China's automobile manufacturing industry. Unfortunately some of them have annual production volumes as low as a few thousand units. Since China is a large country, about 120 automobile manufacturers might not seem to be a large number. But it is particularly large when compared with the US, Europe or Japan. They have only about 10 car manufacturers or so each. It is generally recognized that economies of scale are fundamental to car manufacturing everywhere in the world and also in China. The economy of scale means lower cost and faster growth in the number of cars. .
Apart from that, special treatment and regional protection are also unneglectable constrains.
