Globalization, Market Transition, and Variety of Developmental Models: The Case of the Chinese Car Industry

The Chinese automobile industry has been experiencing some profound changes during the recent market transition and globalization of the Chinese economy. Regarding to the ownership structure and technological upgrading strategies, there have been emerging four major developmental models among the domestic assemblers. Three major theoretical perspectives are then employed including the Schumpeter’s hypothesis, the approach of global value chain, and the developmental state argument; however all have major limitations to provide a good explanation.

This paper proposed to apply an institutionalist approach to understand such a variety of developmental models in the Chinese automobile industry. Four representative cases including FAW, SAIC Group, Chery and Geely were sampled for a systematic comparison in the empirical analysis. The major argument is that the divergent paths among these Chinese car makers were historically rooted in the pre-reform ear of the planned economy, from where the local political structure, developmental ideas and related agencies took on different looks in the market transition and together contributed to a local social construction over the local automobile sector.