A General Evaluation on the International Competitiveness
of Automobile Enterprises in China
LIU Guo-xin, ZHANG Yong-jun
School of Management, Wuhan University of Technology, P.R.China 430070
Abstract: Chinese automobile industry is now on a
stage of rapid development. It is necessary to make its
development blueprint from a global view. Based on a
practicable evaluation system, the paper makes positive
analysis on the international competitiveness of domestic
manufacturers, thereby to provide a distinct description
of internationalization of Chinese automobile enterprises.
Keywords: Automobile manufacturer, International
competitiveness, Synthetic evaluation
1 The evaluation system of international
competitiveness of automobile enterprises in
China
1.1 Selection of evaluation indices
International competitiveness of automobile
industry is defined as a series of abilities for motor
manufacturers to acquire optimal market shares and
benefits[']'[2] In practice, it is difficult and unnecessary to
build an all-inclusive evaluation system, so
"constringency" comes out as an effective method, which
produces a system that includes only a few indices but
can describe accurately and generally the
competitiveness of an enterprise.
The paper builds evaluation system according to the
following principles.
Be comprehensive. The system should thoroughly
describe the international competitiveness of automobile
enterprises in all aspects from the particularities of the
industry. The system should contain both quantitative
indices such as labor productivity, market shares ,and
descriptive factors policy and law system, the level of
production factors, etc.
Be brief but right to the point. The evaluation
system should have a distinct gradation and be concise,
and each index must be independent of each other in
both muster and extent. Particularly, the last level should
include as fewer indices as possible on the premise that it
can describe upper factors clearly and completely.
Be easy to make comparative analysis. Evaluation
involves lateral comparison between countries and areas,
so the indices must provide vertical and lateral
comparison.
Be feasible and workable. The system should be
practicable, in which data should be produced generally
from existing statistics. And it should be easy for some
indices that need re-processing to collect data in case the
indices is replaced by more workable ones13].
1.2 Importance screening of indices
In the paper, indices screening keeps important
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factors and picks out those insignificant ones. The
chosen indices are appraised anonymously by Delfi
technique. If there are M indices on certain grade of the
system and P experts are present, then opinions of the P
experts can be analyzed statistically in two aspects[4][5]:
(1 )Concentration rate, expressed with Ei .
Ei = pX
P1E Ej
5
a-l
(1)
Ei: Concentration ratio of experts' opinions on the
index i.
E : The value of importance of index i injth grade
(Generally, indices are classified into 5 grades of
importance, i.e., i=1,2,3,4,5, which means respectively
most important, very important, important, not
important.
n,: The number of experts who grade the ith index
J.
The value of Ei determines the importance of
indices and reflects the expectation of P experts'
evaluation.
(2)Degree of separation, expressed with d
di= UW p E ni (Ej - E1 )2
(2)
dl: Represents the separation degree of experts'
opinions on the importance of the index i. The critical
value of separation can be determined practically
according to the number of questionnaire samples. If (i
exceeds the critical value, then a next round of
consultation will be necessary. Furthermore, chosen
indices should be tested in integrity and correctness.
1.3 Building evaluation index system
After Preliminary selection of 14 indices, the paper
appraises the chosen factors in importance with Delphi
technique. The concentration and separation of experts'
judgment can be calculate with equation (1) and (2) from
the data of questionnaire (30 copies distributed in total,
28 copies back, the return rate is 93.3%0), showed in
table. 1.
The "well - defined" evaluation system of the
international competitiveness of Chinese motor
enterprises includes 7 indices(showed in table.2), which
reflecting the economic scale, R&D abilities, efficiency
and market performance[8].
2 A positive analysis of the international advanced counterparts. In the light of the reality of native
competitiveness of domestic and foreign enterprises, the paper selects samples on three levels:
groups, car manufacturers in joint ventures and
enterprises non-state-owned enterprises. China FAW Group Co.,
2.1 A comprehensive evaluation on international
Shanghai Automobile Co. and Dongfeng Motor Co. are
competitiveness of domestic and foreign enterprises selected as groups; FAW Volkswagen, Shanghai
(I)Selecting sample for evaluation Volkswagen and Shanghai GM are selected as car
The paper carries out a comparative analysis of manufactures; Geely Company is selected as a
domestic manufacturers with global leaders such as GM, representative of non-state-owned enterprises. The
Volkswagen and Toyota to evaluate the gap in evaluation statistics, showed in table 3.
competitiveness between native enterprises and their
Tab.1 Important appraisement of indice of primary selection[6[]7]
Concentrati Degree of
Indices on Separation Kurtosis Skewness Confidence
Ratio (95.0%)
1 Annual Production 1.821429 0.448413 -0.6424 0.218564 0.259658
2 Annual Sales Incomes 1.285714 0.21164 -1.07585 1.003249 0.178386
3 Industrial Scale 2.392857 0.839947 1.366663 0.962383 0.355376
4 Manufacturing Capacities 2.821429 1.115079 -0.65929 -0.02411 0.409464
5 R&D Investment Ratio 1.535714 0.406085 -0.29481 0.782068 0.247099
6 Self-reliant R&D 1.428571 0.328042 -0.03782 0.935802 0.222089
7 Abilities to Bring Forth New Products 1.857143 0.571429 -1.14872 0.248746 0.293119
8 Total Pre-tax Profit 1.785714 0.396825 -0.43049 0.18561 0.244266
9 Productivity 1.857143 0.349206 0.013617 0.023668 0.229141
10 Cost 2.535714 0.332011 -0.69743 0.477089 0.223428
11 Domestic Market Share 1.571429 0.328042 -0.77488 0.337928 0.222089
12 Global Market Share 1.464286 0.332011 -0.33766 0.773873 0.223428
13 Marketing 2.535714 0.776455 -0.50179 -0.29134 0.341681
14 Pricing 2.607143 0.617725 1.799314 1.343594 0.304761

Tab.2 Indices of the international competitiveness of motor enterprises in China

Xi X2 J X3 X4 X5 X6 X7

Annual R&D Total Pre-tax Domestic Global Market

Annual
Production Annual Sales
j| Investment
Ratio ProfitsProductvty Market Share Share

Tab.3 Evaluation data[6][7]

Indices Xi X2 X3 X4 X5 X6 X7
Annual Annual R&D Total Pre-tax Productivity Domestic Global
X Production Sales (Ten Investment Profit (Ten (/Person*An Market Market
Enterpris (Ten Million Ratio Million -nual) Share Share
Thousand) Dollars) Dollars)
GM 806.66 1935.17 3.35 34.44 66.87 27.2 13.41
Volkswagen 671.9 1636.37 4.26 10.46 46.87 30.5 8.41
Toyota 509.3 889.63 3.98 109.25 55.27 42.9 11.15
FAW 99.35 143.16 1.12 15.72 8.63 19.7 1.66
Shanghai
Automoble. 84.75 157.38 1.75 33.58 12.15 16.6 1.39
Dongfeng 53.01 122.49 0.9 16.71 4.36 10.3 0.86
FAW
Volkswagen 28.7 54.01 0.26 8.1 34.79 5.66 0.47
Shanghai
Volkswagen 34.75 47.36 2.38 7.73 25.09 6.85 0.54
Shanghai GM 19.13 50.66 0.96 1.45 36 3.77 0.32
Geely 9.33 6.45 1 1.15 16.8 1.9 0.16

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 Tab.4 Normalized data
Indices Xi X2 X3 X4 X5 X6 X7
R&D Domestic Global
Annual
\ |Ann
[Enterprises Q Production | Aale
Annual
Sales
Investment
Ration
TotalPre-ta
Pre-tax
Profits
Productivity Market
Share
Market
Share

GM 0.3481665 0.38375824 0.167835671 0.144348045 0.217938272 0.164469706 0.34949179

Volkswagen 0.290002072 0.324504034 0.213426854 0.043840899 0.152755598 0.184423751 0.219181652
Toyota 0.219821484 0.176420078 0.199398798 0.457898487 0.180132321 0.259402588 0.290591608
FAW 0.042880943 0.028389666 0.056112224 0.065887087 0.028126324 0.119119603 0.043262966
Shanghai 0.036579365 0.031209595 0.087675351 0.140743535 0.039598475 0.100374894 0.036226218
Automobile
Dongfeng 0.022879907 0.024290655 0.04509018 0.070036464 0.014209823 0.062280808 0.022413344
Volkswagen 0.012387349 0.010710575 0.013026052 0.033949453 0.113385262 0.034224211 0.012249153
Shanghai
Volkswagen 0.014998619 0.009391831 0.119238477 0.032398676 0.081771665 0.041419761 0.014073495
Shanghai 0.008256794 0.010046245 0.048096192 0.006077371 0.117328814 0.022795985 0.008339849
GM
Geely 0.004026967 0.001279082 0.0501002 0.004819984 0.054753447 0.01 1488693 10.00416992
To ensure the effectiveness of the system, data are The general index of international competitiveness
normalized with following equation: in R&D is a weighted average of factors that describe
advantage in R&D.
Xk'(YI) Domestic manufacturers are behind the three
Xk(Yj) =10 ,( k = 1, ...,7);(j = 1, ,10) 3 leaders in R&D abilities, Followed by Shanghai
ZXk (Yi) Motor, ShangHai Volkswagen comes out first among
i=l
domestic enterprises, whose index is 70.27 percent of
The following is normalized table (Table 4) GM, 55.3 percent of Volkswagen, and 59.77 percent of
(2)A general evaluation of international Toyota,
competitiveness of domestic automobile enterprises
(4) International competitiveness of Chinese
(0 General index of competitiveness of motor enterprises in economic benefit and efficiency.
enterprises in China. The index of competitiveness of economic benefits
The index is a weighted average of all the seven and efficiency (The value of index= 0.057176 X Pretax
indices.
The index of Chinese motor enterprises is behind Profits+0.096399XProductivity) which is the weighted
that of GM, Volkswagen and Toyota with a distinct gap. average of two factors (Total Pre-tax Profits,
Among domestic enterprises, FAW, Shanghai Productivity).
Volkswagen comes out the first among groups and car Chinese manufacturers are once more behind three
manufacturers respectively, while no-state-owned global leaders in economic benefits and efficiency.
enterprises are far behind. The index value of Shanghai Followed by Shanghai motor, The Shanghai Volkswagen,
Automobile is 28.09 percent of that of Toyota, 27.39 whose index is 54.13 percent of GM, 71.72 percent of
percent of GM, and 31 percent of Volkswagen. Volkswagen, 31.83 percent of Toyota, is the first among
(D Competitiveness of domestic enterprises in domestic members.
industrial scale. (1) International competitiveness of Chinese
The general index of competitiveness in industrial enterprises in market performance.
scale (Scale Index=0.044312 X Annual Production + The index of competitiveness in market
0.065437X Annual Sales) which is a weighted average performance (The value of index= 0.278107 X Domestic
of two factors (Annual Production ,Annual Sales)that Market Share + 0.383428 X Global Share) is a weighted
describe scale competitiveness. average of two factors (Domestic Market Share, Global
Chinese enterprises are behind the above three Market Share).
leaders in industrial scale[91'1'01. Among domestic Compared with the three global leaders, domestic
manufacturers FAW is the leader whose index is only manufacturers are behind in market performance, among
10.55 percent of GM, 12.59 percent of Volkswagen, and which FAW comes out first, whose index is 48.72
18.52 percent of Toyota, suggesting that the industrial percent of GM, 52.53 percent of Volkswagen, and 37.96
scale of Chinese motor enterprises is too small. percent of Toyota, with Shanghai Automobile and
( International competitiveness of domestic Dongfeng as immediate followers.
enterprises in R&D.

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 Tab.5 Correlation analysis on competitiveness of automobile enterprises in China
General Xi X2 X3 X4 X5 X6 X7
Correlation Competiti Annual Annual R&D Total Producti- Domestic Global
Analysis -veness Productio Sales Investmen Pre-tax vities Market Market
n t Ration Profit Share Share
General 1 0.1639 -0.0274 0.0773 -0.1084 -0.0685 -0.4053 -0.3233
Competitiveness
Xpproduction
Annual 0.1639 1 0.8384 0.8834 0.7249 0.2336 0.1276 0.1084

X2 Annual Sales -0.0274 0.8384 1 0.9142 0.5913 0.2361 0.1762 0.1419

X3 R&D
Investment 0.0773 0.8834 0.9142 1 0.7730 0.5259 0.2392 0.2209
Ratio

Profit | -0.1084 0.7249 0.5913 0.7730 1 0.7446 0.6907 0.6841

X5 Productivities -0.0685 0.2336 0.2361 0.5259 0.7446 1 0.6710 0.6836
X6 Domestic
Market share -0.4053 0.1276 0.1762 0.2392 0.6907 0.6710 1 0.9938

MkX7Global -0.3233 0.1084 0.1419 0.2209 0.6841 0.6836 0.9938 1

2.2 A correlation analysis on indices of the
international competitiveness of Chinese motor
manufacturers
The paper carries out a two-sided correlation
analysis with SAS 9.0.
(I)Correlation of scale, R&D abilities, benefits and
efficiency, market performance to general
competitiveness.
(2)Correlation of eight indices to general
competitiveness (general sequence), showed in table.5.
3 Conclusion
Industrial scale, R&D and productivities are
strongly correlated to general competitiveness while
sales, pre-tax profit and market performance show weak
correlation, which suggests that the first three factors
have great effect on competitiveness and must be
attached much importance by domestic manufacturers in
their endeavors to improve international competitiveness.
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