OCEAN UNIVERSITY OF CHINA
QINGDAO

Investment

Title of the essay: Comparison study in a car industry between China and Germany

25.05.2006

Table of contents

Introduction 3

History of production 4

Current situation 5

Market demand and influence of regulations 5

Export, import and joint ventures 6

Investment Opportunities 7

Research & Development 8

Conclusion 9

Sources 10

Introduction

In Germany as well as in China, the automobile industry is one of the dominating sectors. Many economic activities like tire industry, plastics industry, metal processing rely on automobile. With changing technologies, production concepts, strategies and products, the car industry is often an initiator of innovations in other industries. Its success has been due to the technological competencies of manufacturers, suppliers and their respective employees. In this essay, I am going to describe the differences or similarities in a car industry between China and Germany, focusing on history, current facts, figures and other economic issues.

History of production

Cars are the most well- known German products on the world market. Germany is actually the birthplace of the automobile - in 1887, Karl Benz designed a couch fitted with an internal combustion engine, and the modern car was born. In 1900- 1920 the first major producers VW, Opel, Mercedes-Benz, and BMW produced a limited number of models, counted to 900 cars a year. At the end of World War II, the car industry was virtually destroyed. Rebuilding began in the West, with concentration processes which squeezed-out many small firms. With the growth of the car firms, numerous suppliers opened up or shifted plants into their districts. In the 1950s Germany began to export cars intensively. Today the total production of german Volkswagen, Opel, BMW, Audi, Porsche, Mercedes-Benz and others counts more as 10 million vehicles a year.

The Chinese car market is in contrast quite young. Fifty years ago, the Chinese government set the prime goal of the state to develop the national car industry. And indeed, nowadays China’s rapid economic growth provides a stable market and thereby a scope for rapid growth of China’s automobile industry. The share of the Chinese car industry in the nation′s GDP already makes up 1.5 percent. There are 123 car-making companies in China. Only two of them can be considered large enterprises, producing over 500,000 cars a year. Eight Chinese car companies make up to 100,000 cars a year. The remaining 113 enterprises work at the capacity of less than 10,000 cars a year. However, the competition on the Chinese car market is rather tough. The same situation dominates also in Germany because of the competition between industrial production locations.

Current situation

China’s automobile production volume increased over the last five years. Now China ranks forth in the world for production volume in car industry. The industry’s rapid growth is due to several external and internal factors like increasing market demand, improved environment for consumers and China’s membership of the World Trade Organization (WTO).

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