The Implication To The Internationalization Of China's Automobile Brands From The Crises Of General Motors And Toyota

In the first half year of 2007, the U.S. subprime mortgage crisis broke out and finally evolved into the global economic crisis in 2008. The economic crisis brought great shock to world economy and industry, especially to the real economy, and auto industry suffered heavy losses. With Chrysler's filing for bankruptcy protection, the U.S. auto giant General Motors (GM) also filed for bankruptcy protection in 1st June, 2009. The commercial giant GM, ranking top 10 of the world' top 500, finally embarked on the road to bankruptcy. We can't help asking what led to such a result of GM. Is it just the disaster brought by the financial crisis?One woe goes and anther comes. At the beginning of 2010, Toyota, another world auto giant, began large-scale recalls of automobiles worldwide due to quality problems of auto parts, which raised great waves in the auto industry again. The recall incidents made Toyota fall into serious crisis of confidence. People can't help asking why Toyota, which was once famous for high quality and low price, took a plunge in quality. What is the root cause of the recalls? What exactly happened to Toyota?Since the outbreak of the financial crisis, the world's auto giants have gradually shifted their eyes to China who has a huge potential market, which not only brings great challenges but unprecedented opportunities to our domestic auto brands. What should China's auto brands do? If maintaining the status quo, we certainly will lose in the fierce market competition, and braving difficulties will be our magic key for survival. China's auto brands enterprises should be prepared with positive attitude to face the crisis because it has brought golden chance for our participation in the formulation of orders of International automobile's new pattern. On the one hand, we need to develop a set of strategies suitable for internationalization of China's auto brands according to our own characters. On the other hand, we should learn from lessons of others to avoid making the same mistakes. In this paper, based on systematic analysis of relevant theories, I use the analysis methods of macro and micro, qualitative and quantitative and "drill down" sequence. I choose crises of GM and Toyota as cases and study their underlying causes of crises. Then I sum up implications to the internationalization of China's automobile brands from crises of GM and Toyota, hoping to sound the alarm for China's automobile enterprises. At the end of my paper, I strive to propose reasoned and practical suggestions for their international road and make them prepare for a rainy day.Chapter One gives an introduction of automobile industry against the background of the financial crisis. Firstly, it points out the reasons of automobile industry's bad suffering in the financial crisis, such as close linkage with real economy and consumer credit crunch. Secondly, it indicates that in the context of financial crisis, China's automobile industry faces huge challenges like heavy losses of auto brand and fierce market competition, but we also have unprecedented opportunities, not only our government puts forward good policy but China has also ushered in unconventional development opportunities. In short, opportunities and challenges go side by side.With the help of theoretical analysis, Chapter Two explains the possibility of internationalization of China's automobile brand. It expounds comparative advantage theory, late-development advantage theory and diamond theory, which lay a solid foundation for the whole paper from theoretical height and make the paper more convincing.In addition to theoretical basis, there is also realistic basis for internationalization of China's auto brand. Chapter Three, with the help of SWOT analysis method, conducts comprehensive analysis of China's auto brand itself and internal and external environment in order to demonstrate the feasibility of internationalization of China's auto brand. This chapter firstly describes strengths and weaknesses of China's automobile brands. On the one hand, we have beneficial government policy, investment environment, low product cost and huge market potential. On the other hand, disadvantages cannot be ignored, such as weak ability of independent R&D, lag of auto parts and so on. Then this chapter introduces our challenges and opportunities in external environment. After the outbreak of the financial crisis, the influx of foreign auto brands increases domestic market competition. Besides, foreign trade protection begins to rise. However, the opportunities coexist. Government has given enough attention and concern to China's auto brands. With the influx of foreign enterprises, they bring advanced technology and capital, and opportunities for us to merge and reorganize foreign auto enterprises which are struggling in the financial crisis. If these opportunities can be handled properly and responded positively, they will undoubtedly be great wealth for China's auto enterprises. Furthermore, the rise of brand awareness of China's auto enterprises and change of consumer concept are surely to promote the process of internationalization.After we have theoretical and practical bases, we should not forget the lessons drawn from others'mistakes before proposing international strategy, because you can win only by knowing yourself as well as your enemy. Chapter Four gives an in-depth analysis of reasons of GM's filing for bankruptcy and Toyota's recall incidents. GM has experienced numerous storms during its history of one hundred years, and shipwrecked at this financial crisis. Many people regard the sudden financial crisis as chief culprit. However, Rome is not built in one day. The deep-rooted reason why GM took bankrupt protection lies in its years of "big enterprise disease". Firstly, GM has high costs of employee benefits and health care, overstaffing and inefficiency, all of which led directly to the high cost of GM automobiles. Secondly, GM's product can't meet market demand. Thirdly, the internal bureaucracy of management resulted in mistakes of strategic decision making and loose management. Fourthly, because of decentralized operation, multi-brand strategy pursued by GM also led to increased cost.The crisis of GM hasn't totally faded, and at the beginning of 2010, global automobile recalls put Toyota in the teeth of storm. Before the crisis, Toyota was a good example of world automobile industry. With the deterioration of recall incidents, people cannot help asking what problems Toyota has. On the surface, there is something wrong with auto manufacturing, but the deeper reason is the crisis of Toyota's expansion model.In the past decade, Toyota expanded rapidly and transcended GM in 2008, becoming two-time winner of global automobile sales in 2008 and 2009. Just due to the rapid expansion, the over-long industry chain of Toyota emerged crack, and one nest led to the near collapse of the Toyota Empire. In order to cope with the financial shortfall, Toyota reduced cost. Just because of the cost reduction, all aspects of Toyota automobile have potential danger. The cost reduction methods, like general utilization of auto parts and reduction of parts suppliers, increase the risk of failure. In addition, the intension of Toyota's crisis is related with mishandling of crisis. First of all, Toyota lacked enough prediction of the evolution of the crisis development, which resulted in quick deterioration of the situation. Secondly, Toyota didn't admit mistakes immediately after quality problems surfaced, which made it miss the perfect time to deal with the crisis. Thirdly, after finding the problems, Toyota attempted to conceal the facts and passed the buck. The lack of social responsibility and ethic poisoned the atmosphere of crisis management and made the crisis management process out of control.Chapter Five summarizes the implications to the internationalization of China's automobile brands from the crises of the General Motors and Toyota, arid puts forward suggestions for the international road. The lessons learned from GM are as follows:firstly, correctly deal with the relationship between "business expansion" and "business enhancement". We can't violate the laws of economic development to just pursue for large scale and quantity, while we should be good at avoiding risks and emphasizing on enhancement; secondly, pay early attention to cost advantage. Although we have labor advantage, it doesn't mean the advantage can be relied on forever and never change; thirdly, focus on auto consumption trends and demand change; fourthly, correctly deal with the pros and cons of multi-brand strategy. Implications draw from Toyota are as follows:first of all, correctly handle the expansion scale and speed and make progress while ensuring stability; secondly, correctly handle public relations in the crisis and establish crisis prevention system in advance; thirdly, improve quality awareness and service ability of China's auto brand enterprises to change past image of "low price and low quality".Combined with above implications, at last the paper proposes suggestions to internationalization of China's auto brands. First of all, establish brand image and build strong brands. China automobiles should gradually move from the image of "low quality and low price". It is our survival rule to improve auto quality and create high-quality brand image. Secondly, improve independent research and development abilities and take the road of self-innovation, which are the core of international competitiveness improvement. Thirdly, focus on market demand and develop new energy automobiles to seize the strategic dominating height of future national competition. Fourthly, enhance service awareness and set up a series of healthy and sustainable development service system, which can bring more brilliant development to our after-sale service industry. In addition, the perfection of recall system is an important step for China's automobile enterprises to go global. Fifthly, use good timing and place to form strategic alliance. China auto enterprises should not only cooperate with each other to make them stronger but also treat our development with the view of world economy integration. The innovation of the paper is that in the special background-financial crisis, it analyzes the environment of China's auto brands from both theoretical and practical aspects. The analysis of deep reasons of crises of GM and Toyota makes the final conclusions more realistic and instructive. The shortcoming of the paper is that, due to the large quantity of China's auto brands and changing conditions, it can't make specific measures for every brand and only can grasp from macro direction. Specific implementation should be analyzed in specific issues and be adjusted during development.