Joint ventures and the development of the Chinese automotive industry

Over the past decade, sales of China's automotive industry rose from 2 million units to 18 million units overtaking the USA industry's level of sales in 2009. This paper analyses the development of the automotive industry in China with a particular focus on the role of the joint venture mode of foreign direct investment. Theories of multinational enterprises and foreign direct investment are examined to provide explanations for the motives for international investment, particularly joint ventures, and the predicted effects upon the host country. In addition to the contribution of joint ventures to the automotive industry in China, the development of indigenous Chinese automotive firms is also discussed.