Ikōki no Chūgoku Jidōsha Sangyō (The Chinese Automobile Industry in Transition), edited by Haruto Shiomi. Tokyo: Nihon Keizai Hyōronsha, 2001, 350 pp., 3,300 yen (hardcover ISBN 4-8188-1339-7)

This book is written by a research team headed by Haruto Shiomi of Nagoya City University and consisted of 13, mostly young, Japanese and Chinese scholars. It is not intended to provide a broad picture of the Chinese automobile industry, but to provide the research results of various aspects of management.

In “Japanization of Tianjin Automobile Group,” Akira Tanaka gives a detailed picture of how the transaction between the automobile maker and its suppliers is organized, based on a comparison with the Japanese automobile industry. The most striking feature of the organization is that the payments for the parts bought by the automobile maker of the Group from its suppliers are not done according to the volume of the parts supplied but done as a dividend of the total sales of the Group. Therefore, when the sales volume of the Group’s car fell short of its production, the suppliers could not receive enough payments for their parts, and hence the Group members ran into chain-debts. Recognizing the defect of their custom, the Group started to accept “Japanization” by the Toyota Group in the late 1990s.

In “Honda’s Transplant to China and its Mother Plant System,” Kenichiro Nakayama describes how Honda transformed a loss-making car plant abandoned by Peujeot into one of the most successful car joint ventures in the country. A thorough transfer of production technology from the mother plant in Japan and a careful creation of supplier networks were the key to the success of the venture.

MA Jia’s “The French-Japanese Hybrid System of Dongfeng-Citroën Automobile Corporation” is a detailed description of the Sino-French joint venture, focusing on its organization of management and production. Ma argues that there are Japanese elements in the management of the joint venture, which have been brought into the company both by the Chinese and French sides.

Fumito Matsumura’s “The Employment and Wage System of First Automobile Works” offers a detailed description of the job ladders and wage structure of the oldest automobile company in China. The company initiated a wage reform in 2000, which increases the proportion of job wages and bonuses in order to enhance pecuniary incentives. Toyota Production System, which the company introduced in the late 1970’s, leaves few traces in the wage system.

In “The Logic and Development of the ‘Stratigraphical Structure’,” LEE Chunli and Takahiro Fujimoto depict various kinds of production system, ranging from the Soviet-Ford-style mass production system of First Automobile Works’ truck assembly plant and the Toyota-style transmission plant of the same company to the craft production system of Changhong Automobile, which are simultaneously observed in the Chinese automobile industry today. They attribute the diversification of the production system to the segmentation of the automobile market and the proliferation of automobile makers which have been created by political reasons.

LIU Fang’s “Is it Possible to Create A Maker-led Distribution Channel?” and Hiromi Shioji’s “Why Multiple Elements and Multiple Tiers?” offer a detailed landscape and an explanation of the Chinese automobile distribution system. According to Liu, the system is constituted of various kinds of agents from different origins, and after automobiles are sent out of the factory, they often change hands four or five times before they reach their ultimate customers. Some auto makers, including Shanghai Volkswagen, are trying to shorten and streamline the distribution channel in order to have more information of their customers and to control retail prices, but Liu’s field research reveals that this goal has yet to be achieved. Shioji says that the reason of the existence of such system can partly be attributed to the influence of the old planned economy, but more importantly it is a result of a common problem of automobile marketing. When the large retailers lack enough marketing power, and when the small retailers can free ride on the large retailers’ facilities, such as showrooms and after-sales services, the same thing can happen in any other country.

The above chapters shed light on various aspects of management of Chinese enterprises which have seldom been documented in any language. These observations provide us with the hints to understand some irregular phenomenon of Chinese economy. For example, Tanaka’s description of the actual working of the maker-supplier relationship suggests the reason why chain-debt often occurs in China. Liu and Shioji’s decipherment of the complicated distribution channel tells us why bazaars are so popular in Chinese marketing.

At the same time, the case studies should have benefited from more theoretical reasoning and more care to the structure. The first four chapters seem to be too anxious to report all of the findings in the field research, blurring the main reasoning and conclusions. The chapter by Lee and Fujimoto seem like a gathering of field notes.

These shortcomings notwithstanding, the book is a great contribution to our knowledge on the Chinese automobile industry and Chinese management in general. It is a must-reading for all serious scholars of Chinese automobile industry and a rich resource for comparative studies of Chinese management.

(Tomoo Marukawa, Institute of Social Science, University of Tokyo)