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of Import substitution. Strict control over the FDI has put majority of the power initially in that corner of state planning and protectionism, with a slow decentralisation and spatial shifts occurring as time progressed, hindering the MNC's from dominating the changing market which has been the case in other emerging markets (Sit, Victor. F.S, Liu, W, 2000). This compliment to the looser control on the auto parts market has allowed the move into initial stages of the prescribed industrialisation strategy model, with a spatial shift in auto production to the production of basic assembly parts, and development of domestic brands, demonstrating primary import substitution industrialisation. Resultantly domestic car usage dramatically increased to around 13 million users in 1998 (see figure 2), with production of passenger cars beginning to exceed 500 000 units and total production exceeding 1 million units by the year 2000 (see figure 3) however with very limited or no exportation.

 

2000-2010, WTO, Policy Reform and Rapid Expansion.

 

Before the year 2000 the majority of auto production was focussed towards heavy duty vehicle production, with product mix and orientation subject to governmental intervention. The leading vehicle producers were JV's with MNC's, where governmental decisions would voice what product would be assigned to an automotive JV, with the end result often being that most of the foreign subsidiaries produced products that were not best suited to the market conditions. However in 2000 China changed its policies and granted foreign ventures the permission to produce small affordable passenger cars, known as “people cars” in order to meet the waking domestic demand resulting from a social shift and increase in middle class (Tang, R, 2009). This latest liberalisation of product regulations now started to locate the market in a stronger position for long term growth and further opening in view of its 2001 accession into the WTO. With its accession into the WTO in 2001, it presented certain problems for the Chinese automotive industry in terms of deceased protection of its domestic producers against international competition, due to decreased import and protectionist tariffs that are attached with WTO membership. A shift in thought was needed in order to encourage the Chinese automotive industry to improve in both cost and quality in order to compete with international competitors. In 2004 the Chinese government introduced a new modified industrial development policy in order to replace the 1994 attempt, which in light of recent rapid growth from 2000, had rendered it a bit outdated.

 

In 2004 90% of all car production was from Sino-foreign ventures, so under the policy there remains limitation on a maximum of 50% ownership, however if located in an export area with a view to export (in order to improve quality to meet world standards) with special state permission no maximum ownership can be applied. Outlining the new policies, sourced from KPMG (2004) the policy also introduced new restrictions on new investment, applying a minimum investment quota increasing the barriers of entry for competito本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。