"China Automotive Industry Development Overview And Analysis On Shanghai's Competitiveness As An Automotive Production Center Using Michael Porter's Diamond Model Framework"

Automotive industry as a whole has long been a focal interest of many countries in their path to industrialization. Most developed nations including the United States, United Kingdom, Germany and Japan have all gone through this phase of automotive induced industrialization and this is what China is presently experiencing. China's automotive industry was first established in 1950s but rapid development and expansion did not take off until in recent two decades. As a result of the downturn in global economy coupled with the saturation in the European and United States automotive markets, global producers have turned to China, one of the largest and the last yet untapped market in the world. Over the years, China's automotive industry has turned into one of the 'pillars' industries in the industrializing China, generating approximately US$75billion in revenue and US$5billion in gross profit per annum, and employing millions of workers across the country. Out of all automotive production centers in China, Shanghai proved to be the most developed and competitive. We applied Professor Michael Porter's Diamond Model Theory in our competitiveness analysis to substantiate our findings. The city's core manufacturer, Shanghai Automotive Industry Group, is the largest vehicle producer in China with an annual output of over 600,000 units. Shanghai is also the base of over 300 international and domestic parts and components suppliers and Baogang Steel Group, China's largest steel production company. This cluster of supporting industries combined with the exceptional infrastructure and transportation system provided an efficient supply chain network to Shanghai's production plants and enhanced the competitive advantage of Shanghai over other production centers in China.Nonetheless, with increasing global competition, Shanghai Automotive Industry Group must continue to enhance its value by ultimately building a leading domestic car brand; and Shanghai must continue to upgrade its automotive cluster and facilitate the growth of new value added relative industries such as logistic, global distribution, and auto financing in order to sustain its overall competitiveness as a automotive production center in China and in the world.