KNOWLEDGE TRANSFER IN THE CHINESE AUTOMOTIVE INDUSTRY

Abstract

The automotive industry has been subject to a turbulent shift in the last decades as its markets, production and focus has shifted its center of gravity towards the East, specifically to China. When Western automotive companies seek to establish themselves on the Chinese automotive market they have been forced to engage in joint ventures with Chinese counterparts. As the motivation for the Chinese partners is to accumulate knowledge, experience and competencies from their mature and sophisticated Western partners, the Western partners are faced with the difficult process of transferring competencies and knowledge that have been accumulated over long periods of time and which can be tacit or hard to codify. The question of how to transfer knowledge and competencies successfully to their Chinese joint venture subsidiaries therefore becomes evident. Our aim with this thesis was to identify how Western multinational corporations can upgrade the competencies of their joint venture subsidiaries in China through the transfer of knowledge. We engaged in research of empirical data concerning both the problems faced by the Chinese automotive industry as well as the study of how Western parent firms successfully can transfer knowledge and competencies to their Chinese joint venture subsidiaries. The empirical data consisted of both secondary data as well as primary data collected through interviews. We formulated our hypothesis on the analysis of our empirical data and a theoretical framework on knowledge transfer. Our study shows that the Western automotive parent firms should focus on knowledge transfer associated to the establishment of new organizational structures and managerial principles. Most of the problems faced by the Chinese automotive industry derives from difficulties of retaining skilled personnel, which makes competence building hard, and that the Chinese organizations are not knowledge sharing, accumulating and creating organizations, which deprives them of innovativeness and development. By creating knowledge orientated organizations, not only will the Chinese subsidiaries be able to absorb competencies associated directly to the faced issues but it will also facilitate any future knowledge transfer between the organizations.