Challenges in Reshaping the Sectoral Innovation System of the Chinese Automobile Industry

Abstract

The aim of this chapter is to analyze and review the progress of China's technological innovation in the automobile sector. First, the structure of the Chinese automobile industry and its relevant innovation system are characterized by multiple camps of actors - namely, multinationals, large state-owned firms, and new local entrants - with different business goals, innovation objectives, and technological capabilities. Secondly, different camps of actors entered the Chinese automobile sector in different phases of the developmental strategies of China. Thus, China's policy transition during 2005-2006 to indigenous innovation created a drive among all indigenous firms toward technology and product development, and the demand for electrical vehicles created a valuable opportunity. However, the internal dynamics or rigidities of the different camps of actors appear to show significant path resistance. Only a persistent push by the Chinese government for indigenous innovation will enable a total structural change, particularly involving the large state-owned enterprises.