In the late 20th and early years of 21st century, the automobile industry has been a great success in Chinese manufacturing. Since ten years ago, Chinese automobile industry has rapid and sound development. Number of people employment become increase. There are several changes of structure of industry in the automobile industry over the last ten years. Although it product a lot of transport requirements in Chinese major city, and the auto market is a free market. Generally, several key issues impacting on continued high growth of Chinese manufacturing.
The structure of Chinese automobile industry has grown from a support industry to a major industry over recent years.
On one hand, the structure of auto industry in China has changed from an automotive components industry country to an automobile industry. The development of automotive components industry are able to guarantee that of automobile; and increasing of saleroom in automotive components year by year results into boom of China's automobile industry. It could be proved by the report of Yang, C. (2007):
In recent years, with the development of China's economics, China's automotive components industry keeps faster development. At present, there are around 5,000 larger-size automotive components enterprises, and 15% of them can reach 50million RMB saleroom per month. In total costs of automobile, components hold above 70%.
On another hand, China has self-owned brand automobile in recent years. Nowadays, Chinese auto is not just copy, it has changed, Chinese design cars by themselves, for example, CHERY. Ten years ago, the best sellers relied on import, for instance, Mercedes-Benz, BMW and Toyota, and there were one or two self-owned brand car on the road, such as the Santana. However, several self-owned brand automobile were produced, and get rise to a major industry for China at present and Chinese brand automobile sold well in the world. Chinese become an automobile export country in recent years; it could be seen in the figure 1.1. According to Smith, R. (2007), Chinese self-owned brand automobile industry is boom stage:
China's self-owned brand sedans done well and about 449.7 thousand sedans were sold in Jan-Apr 2007, taking a share of 29.31% of total sedan sales. The figure was 3.21 percentage points higher than that of Japan-made sedans.
And it means that consumers prefer to buy Chinese auto.
Figure 1.1 (Data from China Automobile Market Report)
In additional, Chinese automobile industry was growth quickly, it lead to several data increase rapidly. Firstly, the sales of Chinese auto are increasing, because the great development of automobile industry in China, this could be seen by the report of Smith, R. (2007) above.
Figure 1.2
Secondly, the outputs of Chinese auto are increasing sharply. According to figure 1.2 and figure 1.3, the output of production of Chinese automobile was totally increased 704.96% in this ten years, possibly no another country can growth as fast as China.
Figure 1.3
Thirdly, the employment was increased, because of the automobile industry. In recent years, this industry located a wide area in Chinese manufacturing, so it also needs employees for the manufacturing, following the figure 1.4, it showed demand of manufacturing is the largest one, in another words, the growth of Chinese automobile industry lead to increase the Chinese employment.
According to these ideas, Chinese consumer would buy Chinese car, because the price of Chinese auto is cheaper than foreign car, and the Chinese auto is state of maturity year by year, consumers possibly prefer to buy self-owned brand automobile.
Figure 1.4 Demand by sector in 2006 (from China Daily)
However, a sharply increase growth of automobile production might meet the transport requirements of major city, for instance, Shanghai's or Beijing's road can not follow a fast development of automobile production in China, and then made traffic jam. The problem is continuing, because of the free market, and it conflict with automobile industry.
Free market is defined that business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy. In other words, free market could afford consumer more choices, and it has made a lot of problems to the transport requirements of major city, because the auto market is a wide area industry, especially Chinese brand automobile has more competitive power in the world, it leads to Chinese consumer has more choices to bought a car instead of bicycle. Actually, China nearly has 1.4 billions people, in other words, per 1% Chinese automobile consumer increase, 140 millions autos would be produced. Chinese automobile industry is too fast, because the auto market is a free market, as Pan, Y. (2007: 8) said on China daily that:
If we follow the current track of consumption patterns to develop the automobile in China, the world will not be able to support it.
Although the Chinese automobile industry is growth fast, the consumer would not be requirement, because more consumer demand autos and problems would not be solved easily, for instance, demand of consumer, traffic jams and air pollution.
In fact, it is conflict between automobile production and free market. According to the conflict, Chinese government has carried out several policies and it could be seen in the life of citizens, for example, bus lane, it is a way that only bus runs, and this policy could compete with automobile. Chinese government is developing the public transportation to find balance between government control and free market in the Chinese auto market.
Actually, the continued high growth of Chinese manufacturing might be impacted by several key issues.
The automobile industry is not the only success story of Chinese manufacturing over recent of ten years, as the rising of quality life, the demand of production increase rapidly year by year. According to that reason, the manufacturing in China increased quickly, Chinese GDP growth is above 10% per annual, it means that Chinese GDP will double in 7 years, it leads to Chinese development of manufacturing growth fast so much, and a part of growth is not a health growth. And As Morgan Stanley's analysis from report of Wang, Q. (2007):
China has seen double-digit GDP growth since 2003, with only moderate inflation, and this cannot last forever. The 'universal law of gravity' should apply to China, too ï¼ as the economy expands, the Chinese economy should eventually hit supply constraints, and inflation should emerge accordingly.
There are a lot of general increases in the Chinese manufacture, for example, electronics industry, machinery industry and computer industry, they also increased substantially as Chinese economy growth; therefore, it made several impacts to factors of production:
Firstly, large number parts of investment in China are shortage investment. A lot of enterprises set up business in China in recent years, and the market basically are a perfect competition, so it is difficult to make a large profit, because of the "over investment".
Secondly, the structure of employee is changing. Following the manufacture growing, the major employees are moving into the development parts, in order to create attract production. For example, the demand of senior engineer is increasing according to the recruit website in China, so the employees become high skill labors for manufacturing, not just a worker.
Thirdly, the natural resource is not enough to develop Chinese manufacturing, but it still develop as a fast speed. Aim to Chinese development problem, the economic growth of China from the extensive mode of economic growth transformed the sustainable development mode, because China is the biggest development country, and no enough steel and oil export to the foreign. Actually, the development of Chinese manufacturing is becoming depended self. According to Beijing Business News, Chinese Sinopec Co, Ltd. stopped export of refined oil to satisfy Chinese consumers' oil demand.
In conclusion, the automobile industry has been great success in the Chinese manufacturing. The structure of Chinese automobile industry has changed from the support industry to the size industry over recent 10 years. Therefore, an increase growth of automobile production might meet the transport requirements of major city, and the problem is continuing, because of the free market, and it conflict with automobile industry. Then Chinese manufacturing continued high growth and it might be impacted by several key issues. There are 3 points: firstly, investment in China is shortage investment; secondly, the structure of employee is changing; thirdly, the natural resource is not enough to develop Chinese manufacturing. Overall, Chinese manufacturing is success, although it has several problems and the structure of manufacturing is changing.
