A multi-national company was introduced in the form of a cross-joint joint venture to resolve the technology reservation of multinational corporations through competition, so that the knowledge accumulated by long-term multinational corporations was rapidly popularized in China and the entire industry and independent brands were promoted to grow rapidly.
The Chinese auto industry is going through a period of strategic development, with annual output exceeding 1 million vehicles. The product structure has been consistent with the structure of the world's automotive products. It has evolved from a product structure with trucks as the main body to a product structure with cars as the main body.
The production order has gradually become clearer, and five major production bases have been formed. The pattern of “3+X†(the three major auto groups and “X†independent automobile manufacturers) has emerged. One-on-one supporting closed industrial chain is being transformed into an open industrial chain with many-to-many cross-connections.
Absorb foreign companies’ knowledge accumulation
The reason for the rapid development is that after the per capita income exceeds 1,000 US dollars, the demand for private cars has greatly increased (income effect). In view of this situation, the Chinese government has made correct decisions. Instead of directly importing products to meet domestic demand (not opening up the product market), it has opened up its production to the outside world and has rapidly expanded domestic production capacity through joint ventures between domestic manufacturers and multinational companies. .
The basis for expanding production capacity is not capital accumulation but knowledge accumulation. Knowledge accumulation is a slow variable. The significance of joint ventures lies in the rapid spread of knowledge accumulated by multinational companies in China. In summary, by attracting strategic investors with the market and internationally transforming vehicle manufacturers and parts and components companies through joint ventures, the long-term knowledge accumulated by multinational corporations has rapidly become popular in China and the entire industry has grown rapidly.
Prior to the entry of multinational companies, China’s auto industry was a highly closed industry. The level of technological equipment, product quality, and new product development capabilities were far from the world’s advanced level. Although car brands such as “Dongfengâ€, “Red Flag†and “Shanghai†were developed during this period, the output was very low and the Chinese auto industry was basically a “truck industryâ€.
Three stages of opening
The opening up of China's automobile industry is divided into three phases: In the first phase, before the “Auto Industry Industrial Policy†was promulgated, the government encouraged the introduction of strategic investors in the vehicle manufacturing industry in various ways. At this stage, many multinational companies have entered China. For example, the United States Chrysler, the German Volkswagen, the French Peugeot and Japan Suzuki, have established joint ventures with domestic auto companies.
In the second phase, the “Auto Industry Industrial Policy†was promulgated in 1994. With parts and components as the focus of development, a more lenient investment attraction policy was established than the entire vehicle. Multinational auto parts production groups also began to enter China's spare parts industry in batches. .
In the third phase, after China's accession to the WTO, a new wave of joint ventures emerged. Only in the first 10 months of 2002, the number of joint ventures between multinationals and Chinese domestic auto companies exceeded the total of the past 20 years. The new round of joint ventures will greatly exceed the first two stages at both the level and the scale of investment.
After these three phases, not only has China's auto production become a highly open field to the outside world, but it has also created a cross-border joint venture that has never existed in the world. A multinational company has produced joint ventures with a number of Chinese companies. At the same time, A Chinese company produces a joint venture with a number of multinational companies.
The most basic factor that determines the development of manufacturing is knowledge accumulation (including technology and system). There are three ways to accumulate knowledge: research and development, self-learning, and learning from others.
Among these three approaches, the cost of accumulating knowledge through research and development is very expensive, and accumulating knowledge through doing middle school (experience) is slow, and learning from others is a low-cost way to accumulate knowledge quickly. This is the path chosen by the Asian economies (Japan, the four dragons, the Chinese mainland) to industrialize: learning from others.
Choose a low-cost route
In terms of learning methods, mainland China is different from Japan and the Little Dragons that were earlier in our industrialization. The practice of Japan and the four dragons is import substitution, that is, not opening up the product market (not directly importing products), but opening up the capital and technology market, importing production lines and technologies for imitation, and digesting imported technologies during the imitation process. The products produced are supplied to the domestic market, when the introduction of technology is fully absorbed. Because the cost of knowledge accumulation of imported technology is lower than that of research and development, its products have international competitiveness, and in turn, export to the countries where it introduced technology.
Mainland China also used this method from the outset, but soon discovered a more efficient way of learning. As with Japan and the four dragons, it did not open up the product market (it did not directly import products), but the difference was that Instead of imitation of imported production lines and technologies, the imported technologies were digested during the imitation process. Instead, they opened up production fields, introduced multinational companies, and transformed their production areas through joint ventures. They quickly solved knowledge accumulation and spread during the joint venture process. .
Therefore, we have seen landscapes that cannot be seen anywhere else in the world. Multinational corporations have gathered in mainland China. The international transformation of production areas through joint ventures is better than import substitution. This is not a one-time introduction of single technology, but a continuous introduction of a knowledge system including technology and systems.
If we say that unitary learning (a product that only imports a multinational company) can enable multinational corporations to control the speed of technology transfer, then diversity learning (introducing multiple multinational corporations) resolves the technological retention of multinational corporations through competition. Its specific form is a cross joint venture. (The author is a professor of Changsha University of Science and Technology. This article represents only the author's personal opinion.)
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