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 / Winter 2011 / Issue 65(originally published by Booz & Company)


China’s Auto Industry Responds to Record Growth

We also need business model innovation — that’s probably the more important type of innovation. We need to explore new models with others. The automotive industry needs to do a better job of working together, sharing resources, and reducing costs. You don’t have to do everything on your own. You can share parts, share market distribution, share product development, and share manufacturing. The business model is actually the core of innovation.

S+B: Multinationals complain that it’s difficult to find quality engineering talent in China. Has that been your experience?
We have difficulty getting really qualified engineering talent and management talent. We are trying to do so many things, to build so many plants, to develop so many products, to become a global company. The shortage of talent is a big problem.

That’s why I see a lot of synergy between China’s automotive industry and Western companies, particularly in the United States. Many companies are facing difficulty in the U.S., but not because they don’t have the technology or management skills. It’s the market that presents a challenge. In China it’s the opposite — it’s a growing market, and yet we have a shortage of technology and of managerial and technical talent. There are opportunities here. We can form strategic alliances and joint ventures. We are interested in talking to companies both big and small. Everybody has partners already, but they could have multiple partners. For example, look at Toyota, look at Volkswagen. And look at us. We have multiple partners — we are partnering with Mercedes and with Hyundai. As long as it enables us to continue to win, we should explore these opportunities.

Reprint No. 00084

Author Profile:

  • Sheridan Prasso, is a longtime Asia specialist. A contributing editor to Fortune, she is an associate fellow at the Asia Society in New York.
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