This paper analyses the factors and the potential economic impacts of the "Made in China 2025" (MIC 25) plans on German OEMs in the automotive sector. German automobile enterprises are currently facing with substantial transformations and challenges, precipitated by the rapid advancements in China's automotive sector, notably in electric vehicle production and sales. These developments are undermining Germany's erstwhile hegemony in the automobile, especially for the Chinese market. China has already made significant progress in the domestic market; after more than 40 years as the market leader, Volkswagen was displaced by BYD in February 2023. The Chinese producers are likewise aiming high for their sales numbers on the German market. The primary research objectives of this thesis are to conduct a semi-systematic literature review and analyses on German OEMs primarily for the Chinese market to identify the respective competitive advantages. Specially, this paper examines the development key indicators of the Chinese electric vehicle (EV) market in terms of market share and government regulations. To achieve this goal, this thesis focuses on two research questions, with a particular emphasis on pure electric vehicles (BEVs):
1) What are the economic impacts of MIC 25 for the German OEMs in the automobile industry?
2) What opportunities and challenges arise from MIC 25 for the German automobile industry?
Table of Contents
1. Introduction
1.1 Problem Description
1.2 Objectives and Research Question
1.3 Structure of the Thesis
2. Theoretical Framework
2.1 The Chinese Automobile economy 1950 - 1987
2.1.1 Great Leap forward 1958 - 1962
2.1.2 The Cultural Revolution 1966 - 1976
2.1.3 Open door policy 1978 - 1990 and post WTO era
2.2 What is the MIC 25 plan
2.2.1 How does MIC 25 differ from previous government plans?
2.2.2 Recent changes of the MIC 25 plan
2.3 German OEMs
2.3.1 Situation of German OEMs
2.3.2 China´s importance for German OEMs
3. Methodology
3.1 Data and methods
3.2 Porter Diamond
3.3 Identifying the impacts
4. Analysis
4.1 Results of the Literature Review
4.2 Porter´s Diamond in China´s Automobile industry
4.2.1 Factor Conditions in China
4.2.2 Demand Conditions in China
4.2.3 Related and supporting Industries
4.2.4 Firm Strategy, Structure, Rivalry
4.2.5 Chance
4.2.6 Government
4.3 Cross-Impact Matrix
4.3.1 Interpretation of results from Cross-Impact-Matrix
4.3.2 Comparison of the variables
4.3.3 Mendelow Matrix
5. Conclusion and discussion
Objectives and Research Themes
This thesis examines the economic impacts of China's "Made in China 2025" (MIC 25) industrial policy on German Original Equipment Manufacturers (OEMs) within the automotive sector, focusing specifically on the transition toward electrical vehicles.
- Analysis of China's historical and strategic industrial transformation through MIC 25.
- Evaluation of the shifting competitiveness of German OEMs in the Chinese market.
- Application of the Porter Diamond Model to assess sector-specific competitive advantages.
- Methodological qualitative review of literature to derive economic impacts, opportunities, and threats.
Excerpt from the Book
1. Introduction
In contrast to Western nations such as Germany, France, and the United States, which have extensive historical legacies in automotive innovation, China's engagement with the automobile industry commenced relatively late, predominantly evolving in the early 1990s. With an aspiration to be a serious player in the global automobile sector, the Chinese government strategically invested in overseas markets, including but not limited to, Japan, the United States, Germany, and France. Consequently, the automobile industry has ascended to a pivotal role in China's overarching industrialization. China experienced a formidable growth between 1990 and 2011 and saw a 56-fold rise in car ownership (Y. Chen et al., 2020, p. 2).
In 2015, The State Council of China unveiled its ambitious plan “Made in China 2025” (MIC 25) which basically includes a three milestones plan to transform China to the world´s leading manufacturer by 2049 (Beraud et al., 2022, p. 66463). MIC 25 is a technical policy which includes ten key sectors. The ten sectors are interconnected and complement each other. Advancements in one sector often require materials, components, or technologies developed in another. For instance, the production of new energy vehicles (NEVs) relies on advancements in new materials and power equipment, which are part of the ten sectors within the MIC 25 plan. One of the key sectors is NEV to which the MIC 25 concept assigns a pivotal role. By comparison, Germany is worldwide known as an automobile nation. With its long history starting with the inventors such as Carl Benz and Gottlieb Daimler in the 19th century. The automobile industry is the key industry in Germany. Accounting for approximately 25% of passenger vehicles and close to 20% of all registrations within Europe, Germany holds a dominant position both in terms of production volume and in terms of sales.
Summary of Chapters
1. Introduction: Discusses the historical background of the Chinese automobile industry, the core objectives of the MIC 25 plan, and the established position of German OEMs as global automotive leaders.
2. Theoretical Framework: Provides a historical overview of China's automotive evolution from 1950 to the present and details the specific goals and structural shifts initiated by the MIC 25 plan.
3. Methodology: Outlines the qualitative semi-systematic literature review approach used to analyze the collected data and identify variables for economic impact assessment.
4. Analysis: Applies Michael Porter's Diamond model to evaluate Chinese competitive factors and uses a cross-impact and Mendelow matrix to determine the significance of variables for German OEMs.
5. Conclusion and discussion: Synthesizes findings on the necessity for strategic adaptation among German OEMs and evaluates the competitive landscape regarding battery technology and government-influenced market dynamics.
Keywords
Made in China 2025, MIC 25, German OEMs, Electric Vehicles, NEVs, Battery Technology, Automotive Industry, Supply Chain, Porter Diamond Model, Cross-Impact Analysis, Market Share, Trade Policy
Frequently Asked Questions
What is the core focus of this research?
The work focuses on the economic impacts of China's national industrial policy, "Made in China 2025," on German automotive manufacturers (OEMs), particularly in the context of the global transition to electric vehicles.
What are the primary themes covered in this thesis?
Key themes include the rapid evolution of the Chinese automotive industry, the technical objectives of MIC 25, the competitive pressures faced by German carmakers in China, and the strategic importance of the battery supply chain.
What is the research goal?
The primary goals are to analyze the competitive advantages within the Chinese electric vehicle market and to identify the specific economic impacts, opportunities, and challenges that arise for German OEMs from the MIC 25 plan.
Which scientific methodology is employed?
The author uses a qualitative, deductive, semi-systematic literature review. Data is further analyzed using Michael E. Porter's "Diamond" framework, a Cross-Impact Matrix, and a Mendelow Matrix to determine the influence of specific variables.
What does the main body analyze?
The main body examines the historical foundation of the Chinese automotive sector, details the ten core industries of MIC 25, analyzes Chinese battery dominance, and provides an assessment of how these factors influence the market strategy of German firms.
What keywords characterize the research?
Core keywords include Made in China 2025 (MIC 25), German OEMs, New Energy Vehicles (NEVs), Battery Technology, Competitive Advantage, and Trade Dynamics.
How does the "local for local" strategy benefit BMW?
The "local for local" strategy, particularly regarding the expansion of joint ventures and localized R&D, allows BMW to better integrate into the Chinese R&D ecosystem and tailor products specifically to the tastes and digital demands of Chinese consumers.
What conclusion does the author draw regarding German battery dependency?
The author concludes that German OEMs are currently heavily dependent on Chinese-controlled battery supply chains and raw materials. To mitigate this vulnerability, German firms are advised to pursue independent research into next-generation battery technologies and foster European partnerships.
What is the significance of the Mendelow Matrix in this study?
The Mendelow Matrix is used to determine the sphere of influence for German OEMs. It identifies which economic factors are internally controllable and which are subject to external geopolitical and market risks, providing a clear suggestion for future strategic actions.
- Arbeit zitieren
- Ali Iravanipour (Autor:in), 2024, "Made in China 2025". Exploring Economic Impacts for German Original Equipment Manufacturers, München, GRIN Verlag, https://www.grin.com/document/1554628
