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The economic growth and industrial development in China over the last decade has been of considerable interest to industry and policy-makers alike, and also been subject of many academic studies. Considerable research on the macro-economic growth and process of industrialisation, as well as the subsequent increase in the domestic demand has been reported. In case of the automotive industry, previous studies have analysed the rather complex industry structure, still dominated by a range of joint ventures between domestic and foreign manufacturers, and specifically commented on the potential and sustainability of domestic demand. In this study we aim to extend the focus by analysing the key features and challenges not only at the manufacturer, but also at the supplier and distribution tiers in the automotive supply chain in China. Reviewing the governmental policies that led the auto industry's development since 1950, we analyse the current capabilities and challenges at the different tiers in the automotive value chain, before concluding with an outlook on the factors impacting on the future development of the automotive industry in China.
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