China's "Auto Belt:" Implications for Assembler Competitiveness

Résumé:

The Chinese market for new motor vehicles is substantially larger than those of either North America or Europe. So will it develop one or multiple "belts" within which production concentrates? A comprehensive analysis of the data on automotive suppliers in the larges Chinese industry handbook suggests that they are concentrated in a "belt" of similar dimensions to the "alley" and "corridor" structures elucidated by Jim Rubenstein and Thomas Klier for North America and for Europe. However, due to the political economy of adding capacity, assembly plants are scattered far and wide, including ones remote both from the "belt" and from the regions with the largest new car sales. Unless there are offsetting factors – such as an assembler's ability to dominate a "remote"regional market – this suggests that parts of the industry remain intrinsically high in cost, and will over time converge towards the footprint of more established markets.