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National Competitive Advantage Of China In Electric Vehicles

1702 words - 7 pages

Related and Supporting Industries:
With more than 7,500 small and medium sized companies, the Chinese automotive supplier market is still very fragmented ( China Association of Automobile Manufacturers (CAAM), 2007). About 70% of the world’s top 100 automotive suppliers have subsidiaries in China, with dispersed activities in this huge country, as most of the OEMs (Original Equipment Manufacturers) have developed their own supplier network around them (Kasperk, 2010, p. 7). Initially, as per governmental regulations market entrance for the foreign OEMs was only possible in joint venture agreements with Chinese partners, this helped the suppliers to considerably improve the quality of their products. Some of these suppliers have managed to attain a quality standard at par to German suppliers in product segments with low and medium technological sophistication. However, a majority of Chinese automobile suppliers still suffer from low R&D activities and low production volume due to small scale production (Kasperk, 2010, p. 7). Only a very few are able to offer complete modules or systems, most of them offer simple spare parts like tyres, fuel tanks and bearings (Kasperk, 2010, p. 7). Chinese automotive suppliers represent a market share of less than 10% when it comes to sophisticated product segmentation.

The Chinese government is implementing concentration policies that help suppliers to develop complete module producers or system providers instead of only delivering ordinary spare parts. Also, a large number of Chinese suppliers are increasing their R&D spending and cooperating with universities. Even though the distance between Chinese and global suppliers with regard to technology and quality standards is quite substantial, Chinese companies are narrowing that distance much sooner than expected.

Many Chinese cities are implementing their low carbon plans through investment in the transportation infrastructure and by supporting public transport and low carbon vehicles, from e-bicycles to e-cars (Tagscherer, 2012, p. 9). The required infrastructure is of crucial importance for the further development of new and alternative energy vehicles. At the national level, State Grid Corporation, China Southern Power Grid, Sinopec, CNOOC and other leading Chinese energy companies in 2009 announced their future plans for constructing electric vehicle charging stations (Tagscherer, 2012, p. 9). The State Grid Corporation alone plans to build 10,000 charging stations and more than 500,000 charging poles by 2020 while their investment in major equipment and the charging stations is reported to reach 32.3 billion CNY (Tagscherer, 2012, p. 9).

On the other hand, some experts believe that there will be no development in the further establishment of charging stations unless there is strong government support and help in the creation of new business models, as no short-term business will achieve success from charging stations. This limits the interest of...

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