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"The Advance to Car Production and Globalization of the Chinese Munitions Enterprises"

By Jin Chen, Takahiro Fujimoto and Chunli Lee


This paper undertakes a practical analysis on the Chinese munitions enterprises' advance to the car production, their formation of the development strategies and the globalization process with foreign-ventured enterprises in order to formulate their mass production system. Along with the end of the cold war, the Chinese munitions enterprises began to transfer to the production of civilian goods. Automobile industry became the primary participation circle to each munitions enterprise. The most successful cases are Chang'an Automobile (Group) Liability Co., Ltd.(Chang'an Auto) to which Armament Industry Corporation(Armament Co.) affiliates, Changhe Aircraft Industry Co. and Harbin Aviation & Automobile Manufacture Corporation Ltd. to which Aviation Industry General Corporation affiliate. Their auto production were ranked the top forth, seventh and ninth in 1999. The background conditions and organization structure of munitions enterprises are quite different with civilian enterprises in their advance to car production. Different with civilian enterprises, the car production of successful munitions enterprises almost started from zero and rapidly increased within short duration. Their development are close related with the development strategy to China of the global enterprises in the Chinese automobile market. This paper will analyze on the development history of the munitions enterprises and their globalization development based on the actual conditions. From the historical view, the development of the Chinese munitions enterprises were affected by the relationship changes with Japan, the former Soviet and America, especially by the China-Japan War. Therefore the production bases of the Chinese munitions industry in the inner areas were set up during China-Japan War and were more enforced during the cold war between America and Soviet. The factories groups which were established in these production bases and produced military goods or machinery goods became the primary enterprises which shifted to the automobile production. The successful munitions enterprises possess rather better management resources and location conditions. Especially, many years' technological know-how of its machinery production, trial production of jeep, experience of small quantity production and the industrial foundation of Chongqing as the location of Chang'an Auto are important conditions which led to its success later. The strategies of "giving up big road, undertaking two-side roads" especially "Mainly Targeting Minis" formulated by Armament Corporation and Aviation Corporation in their initial development period of vehicle production played an important role in rapid increasing of Mini vehicle makers such as Chang'an Auto and the advance to compact car production. After the technological introduction of compact car production, Armament Corporation adopted serial strategies, such as the enforcement of its coordination with foreign makers speedily, structure reorganization and listed stock and mainly increased the car production capacity of Chang'an Auto. From now on, along with WTO participation and motorization, munitions enterprises' coordination with global enterprises such as Suzuki, Mitsubishi, Fuji Heavy Industry, GM and Daimler-Chrysler. will be more enforced and will plan more important role in compact car(around 1L) market.

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