China and the Reshaping of the Auto Industry: A Dynamic Capabilities Perspective

Abstract

Chinese firms are grappling with the four paradigm shifts around electric, connected, shared, and autonomous vehicles that are roiling the rest of the global auto industry. This article, which follows my earlier MOR article about the auto industry (Teece, 2018a), looks briefly at the development of capabilities in these fields by Chinese firms. It then analyzes the prospects for Chinese firms to use them to gain a stronger foothold in the global market, and for multinationals to continue to prosper in China. The paradigm shifts are creating new entry points for Chinese firms to capture value in the industry, and some potential global contenders have demonstrated solid dynamic capabilities in electric vehicles (Geely), shared vehicles (Didi Chuxing), and autonomous vehicles (Baidu). However, multinationals are also moving forward in the same fields and have strong complementary assets such as respected brands and well-honed dynamic capabilities.

From “obligated embeddedness” to “obligated Chineseness”? Bargaining processes and evolution of international automotive firms in China's New Energy Vehicle sector

“…Viewing the evolution of inter‐firm linkages and localization of value‐added activity as the result of a dynamic myriad of permanently ongoing bargaining processes, the cases presented here cannot claim to be representative. However, individual empirical findings of this study are, in general, consistent with other contributions on the topic such as Kennedy (2018), Yeung (2018), or Teece (2019). Nevertheless, empirical validation of the main conclusions of this article would be beneficial, as well as a comparison of mutual influences in policy making and sector‐specific outcomes for other branches defined as “strategic emerging industries.” Evaluating bargaining processes between Chinese and foreign stakeholders is relevant and worthwhile, but due to its intransparent and partly sensitive nature, also a challenging endeavor.…”

“…This picture, however, may change fundamentally, as the industry currently undergoes various transitions with regards to engine technology, business models, connectivity, and automatic driving (Teece, 2019). China has been one of the first countries to provide substantial support for the development of a market for “New Energy Vehicles” (NEV) which include battery electric vehicles, fuel cell vehicles, and plug‐in hybrids.…”

Multidexterity: Combining Competing Business Models in Transforming Economies

“…Indeed, while combining internationalisation strategies have proven effective for some MNCs (e.g., GE Healthcare), managing the tensions between the global integration and local responsiveness strategies is challenging. Transforming economies in general and China, in particular, may be advantageous for some MNC strategies (Luo & Child, 2015), but this does not mean that it is unproblematic to find a good fit between the local institutions and entrant firms’ practices (Teece, 2019). On the contrary, any combination of BMs in pursuit of balancing global integration and local responsiveness is likely to be subject to the dynamism inherent between the two (Kumar & Puranam, 2011; Luo & Child, 2015).…”

Long-term energy transitions and international business: Concepts, theory, methods, and a research agenda

“…China’s recent espousal of renewables has included a historic bet on electric autos: the country has already gained a technological and production lead in the area and is well equipped to flood export markets with a new generation of cheap and practical electric cars (Teece, 2019 ). Chinese automakers have been able to ramp up volumes partially due to restrictions on foreign imports (Kenworthy, Newman, & Gao, 2015 ), placing other countries with nascent national automotive industries but without the similar domestic markets and international political power at a great disadvantage.…”