Research On Chinese Mini-Car Industry

Chinese mini-car industry is an important component of the automobile industry. In early1980s, for the purpose of restructuring the products, some companies introduced mini-car products for survey and imitation. Anhui Huaihai Machinery Factory successfully made the first trial mini-car in China in1978.With the development in the past30years, mini-car industry has become the main force in Chinese automobile industry and occupied a very important market position. In this dissertation, after the discussion of definition of mini-car, the industry organization, market structure, international investment, product differentiation, and product life cycle of Chinese mini-car is researched by applying the industrial organization theory. The judgment of development of mini-car industry and suggestions about this development is proposed as well.First of all, the definition of the mini-car is discussed. The original definition and the evolution of the standard definition, definition in official documents, and definition by industry association is reviewed. Currently, the minibus belongs to M1. It is also called cross passenger car or forward control passenger car. Mini van, also called light truck, belongs to N1. However, there is still no regulation about their engine displacement. In addition, the product life cycle theory is used to analyze the development of mini-car industry. In this part, the development of European mini-car, Japanese mini-car and Korean mini-car is also introduced. In Europe, the mini-car has evolved into CDV and MPV. In Japan and Korea, the mini-car is MPV. Moreover, combined with empirical study of the development of the mini-car industry, it is predicted that the mini-car will be popularized and developed in the developing countries and regions in Southeast Asia, South Asia, Africa and Latin America.On the basis of the overall analysis of the development of the mini-car industry, the industrial organization and operation conditions are carefully analyzed. In the industrial organization analysis, the economies of scale are discussed by four dimensions which are brands, market structure, industrial cluster and the scale of industry. Furthermore, the character of mini-car industry is researched on the basis of industry merger and acquisition, product differentiation and market entry barriers. It is believed that Chinese mini-car industrial organization shows features as follows:First, it has industrial clusters. After the development in the past30years,5industrial clusters have been formed in China, including Chongqing, Liuzhou, North China, Jiangsu-Zhejiang-Anhui and Northeastern old industrial base. Second, key enterprises improved their economical efficiency of scale and became the important force to improve the competition capacity of Chinese mini-car industry. Third, there are both cross-regional restructuring and cross-ownership restructuring. Fourth, product differentiation was improved, and product updates speeded up. But, industrial barriers and economies scale barriers are still the main market entry barriers of this industry. Chinese government has strictly administrative entry restrictions in automobile industry on two levels. The new entrants have more costs for less market share cannot lead to economies scale. Meanwhile, because automobile industry is technology-intensive, new entrants need to be familiar with the industry, grasp skills, and learn new technology. The learning curve is illustrated in this industry. As for the operation condition of this industry, the business model can be classified into four categories which include Chinese-foreign joint ventures, state-owned enterprises, state-owned-private enterprise and private enterprises. It is proved from the results of empirical research that Chinese-foreign joint ventures and state-owned-private enterprise are the most successful business models.Generally speaking, it is reckoned that de-mini is the trend of the mini-car industry. To improve the development of this industry, the valid definition and standards of the mini-car should be set, and the strategy to support the transformation, upgrading and internationalization in this industry needs to be introduced. Also, horizontal integration, promotion to make economies scale and formation of industrial cluster need to be done.