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ISSN: 2045-0621

Online from: 2011

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Chang'an Automobile and the Chinese automotive industry


Document Information:
Title:Chang'an Automobile and the Chinese automotive industry
Author(s):Michael Roberto (Trustee Professor of Management at Bryant University, Smithfield, Rhode Island, USA), Grace Chun Guo (Assistant Professor of Management at John F. Welch College of Business, Sacred Heart University, Fairfield, Connecticut, USA), Crystal X. Jiang (Assistant Professor of Management at Bryant University, Smithfield, Rhode Island, USA)
Citation:Michael Roberto, Grace Chun Guo, Crystal X. Jiang, "Chang'an Automobile and the Chinese automotive industry", Emerald Emerald Emerging Markets Case Studies, (2011)
Keywords:Automotive industry, China, Consolidation, Industry analysis, Joint ventures
Article type:Case study
DOI:10.1108/20450621111187380 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Acknowledgements:Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; financial and other recognizable information to protect confidentiality.
Abstract:

Title – Chang'an Automobile and the Chinese automotive industry.

Subject area – International business

Study level/applicability – Undergraduate/graduate/executive education.

Case overview – China has become the world's largest producer of automobiles, surpassing the USA and Japan. The Chinese auto industry differs quite significantly from those countries though. While the industry exhibits a substantial degree of concentration in the USA and Japan in early 2011, it remained highly fragmented in China. The Chinese Central Government had announced a desire for consolidation, yet it remained unclear whether a significant shakeout would occur in the near term.Like many Chinese automakers, Chang'an partnered with well-known global auto makers to develop, produce, and distribute its products. In the coming years, Chang'an hoped to develop more independence from its foreign partners, including the production and distribution of self-branded cars. However, the company grappled with how it could strive for independence while managing its existing joint ventures. Executives worried too about how to compete with foreign automakers who had achieved global economies of scale.The case provides a rich description of the evolution of the Chinese auto industry, and it documents how the Chinese industry differs from other global markets. Readers can analyze the extent to which they believe scale economies provide foreign firms an advantage over smaller Chinese rivals, and they can evaluate the conventional wisdom regarding the industry's minimum efficient scale. The case also provides a detailed account of Chang'an's rise to prominence. The case concludes by offering an in-depth description of the firm's key rivals, and it presents the key questions being considered by Chang'an executives in 2011.

Expected learning outcomesEnables students to examine how and why an industry's structure can differ substantially across geographic markets. Enables students to examine whether the need to achieve economies of scale may cause substantial consolidation in the Chinese auto industry. Provides an opportunity to evaluate the pros and cons of the joint venture strategies employed in China. Provides an opportunity to examine how a relatively small firm can position itself against large multinationals in a high-growth emerging market.

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