How a Battery Firm Became a Carmaker

Pedro Nueno explores unique Asian automotive strategies

14/03/2014 Barcelona

Pedro Nueno

The automotive industry is a good example of an industry in which emerging economies have strengthened their role as global leaders, and nowhere is this truer than in China. In their research paper, "Corporate Strategies of Automotive Firms: How to Become Global Leaders," published in Competitiveness Review, IESE's Pedro Nueno and Rosa Caiazza of Parthenope University of Naples discuss corporate strategies that have allowed Asian firms to become global leaders.

While strategic partnerships and M&As are common practice in many industries, the dynamics of the auto industry present several nuances. Emerging technologies in the areas of alternative power trains and electric and hybrid vehicles are driving sector convergence. This is creating opportunities for strategic partnerships between auto and technology companies.

The Chinese government plans to position China as one of the leading producers of electric and hybrid vehicles, and convert its automotive industry into a global player.

Supported by the government, many Chinese firms are conducting strategic partnerships with the primary motive of obtaining and controlling key assets, something the authors say is unique among emerging economies.

The BYD case

In particular, the authors discuss the case of the Chinese company BYD. The company became one of the biggest manufacturers of batteries on the back of a surge in the global mobile phone market, and later entered car production.

BYD's metamorphosis from battery to car manufacturer has made it the onlyvertically integrated auto manufacturer that makes its own batteries. The authors say that BYD's success in the international market will depend on the company's ability to jump-start and implement a currently undeveloped strategy for global expansion.

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