Heritage with a High Price Tag: The Rise of China's Luxury Automotive Industry

Abstract

This thesis seeks to answer the question, “Which attributes in China’s market conditions during the past 40 years have led to the creation of the largest automotive industry in the world?” The first chapter provides a historical background and establishes the current context of the automotive industry in China through two strategy perspectives. Michael Porter’s “Five-Forces-Model” and “Clusters and the New Economics of Competition” provide a framework to evaluate the Chinese automotive industry’s development and global competitiveness. The second chapter argues how the industry’s highly competitive nature has transformed the role of luxury among Chinese automotive consumers. The chapter tackles three specific issues: what is luxury, who buys luxury and evolving trends in luxury. In conclusion, this thesis seeks to characterize the future of luxury in the Chinese automotive industry as “Cars with Chinese characteristics.” One way to understand “Cars with Chinese Characteristics” is through the lens of the Chinese philosophy, yin-yang, where yin and yang are complementary forces that interact to form a dynamic system in which the whole is greater than the assembled parts. Through the creation of paradoxes, we learn that heritage is the bridge between the past and the future. The future of luxury in the Chinese automotive industry lies within the resilient and innovative brands that are able to manifest this heritage with a high price tag.