Foreign Automobile Companies in China

Abstract

The globalisation of the business environment has companies facing several enormous challenges, the most important of which being internationalisation, market maturity and increased customer power. Developed countries still represent the most important markets for most of the large MNCs. These markets, however, are becoming increasingly mature and saturated. More often, the markets are characterized by over capacity, low margins and lack of growth, as well as shorter product life cycles. This means that the competition is becoming more intense, and companies can grow primarily at the expense of the competitors. However, since slightly more than 10 years ago, after serious large-scale political changes in the world, new markets, which used to be quite closed for western companies, attracted the attention of the global investors and big multinationals. Eastern European, former Soviet countries’ and Chinese economies appeared to be in need of investments and assistance to revive or save their economies. To some, new opportunities promised benefits, to others, required investments were associated with uncertainty and risk. China with its population of 1.2 billion looked as an attractive market, but was China able to match with the foreign offer? Doing Business in China is not similar to they way they do it in Western or Eastern Europe, Northern and South America, and not even similar to Japan and other Asia and Pacific countries. Historical and cultural facts playing a most important role in the formation of country’s business practices is still a mystery for many western businessmen. Realising the existence of differences and uncertainty, unpredictability of many factors, risks etc., a number of foreign companies entered this country for business purposes and many of them have succeeded. In this work we aim to study the foreign companies operating in China. Among other foreigners, automobile companies seem to carry on their business successfully. This sector is one of the most rapidly growing in China, and China is one of the countries keeping stable pace of growth when the other markets decline. By the case study of Volkswagen and General Motors, we in this work, tried to describe strategies of this companies in China, their position and perspectives, as well as the perspectives of Chinese auto industry. We have raised some questions for further studies and if our work would be useful for the researchers after us, we would consider our work as successful.