Market Opening and Transformation of China’s Car Industry

Based on a study of interactive learning and industrial growth, this paper explores the strategicadjustmentsand competitive advantages of both multinationalcorporationsand indigenous firms in the auto industry after China’s WTO accession, and forecasts the development trend in thisindustry. Themain conclusions are:(1)with tradeand investment liberalization after China’s WTO accession, competitive advantages of transnational corporations haveplayed an activerole. Underthis circumstance, indigenous firmsdepend heavily upon multinationalcorporations byestablishing jointventuresand introducing new models. (2) Asa result ofstrategic adjustment, China’s car industry willtransform from an independent industry into a dependent one. (3) Under pressure from the competitive advantages ofthe dominantmultinationalcorporations, infantindustries and enterprisesof developing countries need, fortheirdevelopment, more supportfrom local government. In addition, one of the key factors in the future development of China’s car industry is the establishment of an interactive learning relationship between indigenous firms and multinationalcorporations.