Development of the Chinese Automobile Industry: Analysis of success factors for International Joint Ventures at the example of SVW

The Chinese Market is the fastest growing market in the world. Especially in the car industry, where most countries are already saturated, in China the number of cars per person is still increasing, which makes it even more interesting. Many foreign companies have tried to enter the Chinese market in order to get a share of the profit. In the Automotive sectors, foreign companies that want to enter into China need to do this through a Join Venture (JV) together with a Chinese company. Often, these JVs fail, due to different reasons. However, Shanghai Volkswagen, the JV between the German Volkswagen AG (VW) and the Chinese Shanghai Automotive Industry Corporation (SAIC) company, which was founded as early as 1985, is one of the very few successful, if not the most successful international JV in the Chinese automotive market. This paper tries to identify the main reasons for success of the German –Chinese JV, of which intercultural sensitivity, mutual respect for the other sides’ way of doing business, the willingness to commit long-term and with a high investment, were the main results. Even though many of the factors are mainly concerned with the environment as it was in 1985, some of the factors can still be a point of orientation for companies who want to enter the Chinese market at this point of time