Chinese Different Strategy About Automotive Industry

Khodrocar – Taking a glimpse of USA’s automobile industry only 4 car making automobile mother companies come into mind: GM, Ford, FCA and Tesla. Even Germany only holds WV, BMW and Daimler AG as its main car makers. At the same time, one can easily count over 40 car making brands.

What is up with China’s automobile multi branding strategy? What are they after?

"Chinese car makers are in two form of local car makers and major car makers. Local car makers act with the government’s support on their back. Chinese government since mid-90s started to increase the number of local car makers in order to increase employment and competition and also absorption of capital.” Said Babak Sadraei, an expert in the field of automobile industry.

"When it comes to automobile industry, Chinese opened doors to domestic assembly and foreign imports along with creating a lot of local car makers. The decision caused a huge competitive and diverse market to form. Such marker has its own specifications and therefore automatically selects the best carmakers and eliminates the worst. So after a while all these car makers are going to be filtered.” Said Sadraei in answer to the question if the strategy worked for Chinese or not.

Whether the strategy is good or bad, the expert stated: "This is wrong to decide whether a strategy is good or bad by itself. It must be studied considering the affecting conditions. Such strategy pays off very good for China because it has over 1.5 billion population with over 28 million annual automobile consumers. The same strategy will never pay off in Iran with only 80 million population.”

He set an example: "Is it a good or bad strategy to shut down importing foreign vehicles in order to help and support domestic automobile industry? The answer is that it was a good idea, but in 30 years back. Today, it only affects negatively.”

It appears that the exotic or we might think, Wrong Strategy of Chinese automobile industry worked very well in that country. More importantly, China altered itself right based on the daily needs and various circumstances to become one of the most effecting car makers in the world.

Iran automobile industry however is yet struggling with its beginning phases of growth, deciding whether it is a good strategy to shut down foreign vehicle import to support domestic automobile industry or not.

Khodrocar Journalist and Translator: Mostafa Anisi