78 SUSTAINABILITY passenger vehicle market during thesame during passenger vehicle market 25 %annualgrowth intheoverall Chinese per year in thelastdecade, faster thanthe for premium carsinChina increased at30% (Fig. 1).According to McKinsey, themarket of theworld’s largest two auto markets IHSAutomotivefirm [2017].Chinaisone year growth according streak, to consulting previous years thatwould continueafive- 88 millionvehicles, a2%increase from the Global automotive salesfor 2016couldhit brands compete arena. intheinternational The automotive isaglobalbusinessinwhich Environment, (GESJournal), Sustainability Vol. 10,No1,p. 78–84. discussed, andanewbusinessmodelproposed. model inauto industry. The current businessenvironment isanalyzed, problems ofsustainability thatapplies aninnovative business authors presented carmaker acasestudyofnewborn Suor OrsolaBenincasaofNaples Graziella Ferrara ABSTRACT. OF AUTO INDUSTRY THE CHANGING GEOGRAPHY DOI: CITATION: KEY WORDS: IN THE GEOGRAPHIC PATTERNS 10.24057/2071-9388-2017-10-1-78-84

Ferrara G.(2017)Geographic intheautomotive patterns industry. Geography, This article aimsto develop someconceptonneweconomicgeography.This article The economicgeography, automotive industry, . Fig. 1. Emerging markets in the next decades with local partners, were the American Motors were Motors with localpartners, theAmerican decided to produce inChinajointventures eighties. The firstforeign companiesthat foreign investment dates back to the mid- The openingofChina’s to auto industry advantage ofpotential vehicle salesgrowth. essential for thatwantto automakers take of more profitable, modelswillbe pricier increased buthighlymanagedproduction be counted onfor consistent returns and ventures withChinesecompaniesthatcan joint more than30millionby2020.Smart toexpected boastannualvehicle salesof [IHSAutomotive,period 2016].Chinais the big Japanese car makers werethe bigJapanesecarmakers onceagain but strategic allianceswithChinesepartners, producersAmerican were ableto form complex negotiations, someEuropean and Atthisstage, longand after knowledge. transfer oftechnologies andmanagerial but italsorequired investment andthe which itoffered apotentially hugemarket, andlargegovernment, foreign groups, to manufacturers, almostallcontrolled bythe themainnational jointbetween aim, itwaspromoted theestablishmentof Dyer, 1996;Egeraat,Jacobson,2005].Atthis and advancedtechnologies [Coe, etal2008; endowed withadequate financialresources of asmallnumberdomesticmanufacturers wasto encouragethegrowth of thenewpolicy consideredof asector strategic. The objective to thedevelopment and consolidation policy adoptedthe government atargeted industrial openedinthemid-nineties, when industry A secondphaseintheChineseautomotive and Volkswagen [Holmes, 1983,2004]. Volkswagen and Toyota, andSAICwithGM withPeugeotpartnered andHonda,FAW with Dongfengfor brandingandtechnology: (SAIC). They relied heavily onpartnerships Co.and ShanghaiAutomotive Industry by Dongfeng Auto, First Auto Works (FAW), China’s wasdominated automotive industry foreign manufacturers inChina.Untilthe ‘90s, pioneers remained for adecadetheonly Guangzhou. These European andAmerican began theproductionataplantlocated in andPeugeot(SAIC) whichinthesameyear Automotive Corporation Industrial the Santanamodelinajointventure with Volkswagen whichin1984beganproducing venture withtheBeijingAuto Works (BAW), production oftheJeepCherokeeinajoint in1983the whichstarted Corporation G. FerraraPATTERNSGEOGRAPHIC IN THEAUTOMOTIVE INDUSTRY optto oa lyr hr,Gey Y M Joint ventures FAW-VW Local players , , BYD Local jointventures Chery, Geely, BYD Competition Collaboration Table 1. Localization Approaches Table 1. Localization National Cross-National innovation andsustainability. new businessmodelthatcombinesdesign, ableto implementa carmakers newborn have ledtomarkets thedevelopment of China, 2011]. [Nielsen These changesinthe to majorfactors followthe othertwo design were andsustainability decisions. Innovation influencing shopping factor most important and personality, the andconsiderstyle view carsasexpressions oftheiridentity and features. The newgenerations ofbuyers more sophisticated ofdesign, interms quality Chinese carbuyers are becomingmore and MGRover. carmaker British the defunct on technology acquired thatSAICMotor from brand wasRoewe, based whichwasprimarily 1).Arelatively (Table successfulpartners acquisitions orallyingwiththeirglobal through imitating, buyingtechnology through been strugglingto develop theirownbrands decade, China’s auto manufacturershave of theChinesemarket. Thus, over thepast commandedabiggershareand Hyundai brandslike international Volkswagen, Buick homegrown carswere oflower quality, As Chineseconsumersusedto think Frigant, Lung, 2002]. 2005; Gertler, 1996,2001;Edensor, 2004; their foreign competitors Bathelt, [Depner in technology, andbranding, experience than wereChinese carmakers perceived asweaker wave ofconsumerdemand. Someyears ago, andtriggered anew on passengercarprices positioning, theyputdownward pressure marketThrough imitationandlow-end Geely andBYDentered into competition. suchas thelate 1990s,In carmakers private negotiations. at thewindow, orwere simplyexcluded from & AGeely-Volvo, SAIC- ()

79 SUSTAINABILITY 80 SUSTAINABILITY car exporters. As anindependent domestic car exporters. of China’s largest andpassenger automaker passenger cars, minivans, andSUVs. wasone It mainproducts werein 1999.Chery’s Province. begantheautomobile production It in headquartered ofEastChina’s auto manufacturerwith 1997 asState-owned Automobile Co.,Chery Ltd. wasfounded in consultants andscholarsto refine ouranalysis. we verified our findingswithseveral external research (GoogleScholar, ProQuest, etc.). Then databasewe web-based firstconducted To buildaninitialunderstandingofthecase, research objectives, we present acasestudy. nature ofour theexploratory Considering sustainability. withinnovations andbenefits connected to achieve general the automotive industry applied thisinnovative businessmodelin thathas carmaker the caseofthisnewborn reductions. The following illustrates text toto radicalenvironmental bring impact of satisfaction. This modelhas thepotentiality actors, andcapableto fulfillagiven demand delivered byoneormore socio-economical an integrated mixofproductsandservices, sell products, as anditcanbedescribed focus ratherthan onoffering satisfaction The innovative businessmodelhasto demand. able to satisfyaparticular systems thatare together product andservice and saleofphysical products, to theoffer of thecenter ofbusinessfromshifts thedesign is theresult ofaninnovative strategy that and environmental sustainability. This model business modelhasto combineeconomic aninnovative carmarker thenewborn In not ledto environmental reductions. impact incremental technological improvements do source ofprofits.as primarily suchfirms In thatconsiderssaleofvehicles manufacturing have appliedabusinessmodelfocused on While traditionalChineseautomotive firms GEOGRAPHY, ENVIRONMENT, SUSTAINABILITY 01(10)2017 CASE STUDY METHODOLOGY including Volkswagen, GM,Opel, Volvo, SAAB, engineering andmanagersfrom majorOEM’s the financialcrisis, was ableto recruit experience. automotive industry Thanks to and createdworld ateam withextensive Qoros integrated talentsfrom around the sales (Fig. 2). & supplychain,marketing manufacturing, human resources, design &engineering, sustainable modelbaseoninnovationin Qoros sincebeginning hasfocused ona oflegacies. without thecomplexity Thus, beginning fromdo thingsright the very toThis presented Qoros anopportunity from scratch to buildanewbrandinChina. ofbuyinganexistingbrand,Instead itstarted andexpensive.be more time-consuming a completely newpath,whichseemedto [Qoros, 2016].Qoros to wasdetermined take standardsproducts thatmeetinternational to providing consumerswithhigh-quality from scratch andisstaunchlydedicated originating from China,Qoros started As automotive aninternational manufacturer 2013. March 2013andwent onsalesinNovember on itsfirstpublicappearanceinGeneva development production, itwent andtrial production modeldevelopment, auto parts first prototype. years anothertwo of After yearsthen anothertwo indesigning the Co.strategic planningwithMcKinsey and The newcompany years spenttwo in from parents. itstwo and strong support independently withampleinvestment Qoros, asastandalonebrand, operated Corp, 2016]. fromderived operations[Israel worldwide with over 70%ofitsconsolidated revenues largest holdingcompaniesandaglobalplayer Israel, Ltd IsraelCorporation wasoneofIsrael’s oftheStatein 1968bytheGovernment of joint venture Founded withIsraelCorporation. 2007itformed brand.an international a In strength influenceto andinternational build withfinancial aglobalpartner seeking automaker, hasbeenaggressively Chery figures. Qoros had its factory inChangshu,figures. Qoros haditsfactory could onlybe answered by solid sales consumers will buyinto thisnewconcept larger rivals. However, whetherChinese needs, whichgave themadvantagesover for respondingmanufacturing to buyers’ in improvingmade continuousefforts Through thisteam ofspecialists Qoros implementation ofasystem. independent designs to thephysical andlogical,abstractions implementation- traditional process ofmovingfrom high-level adopted engineering, forward whichwasthe on consumersinChinaandEurope. Qoros extensiveconsumerresearchconducted design studios inMunichandShanghai in design andengineering. The Qoros new automotive talentswasalsoinvolved teamThe international ofspecialistsand of time. period to fulfillitsambitionswithinashort technology bestpractice andinternational art the company wasableto utilize state-of-the- whohadledR&Dfor 2–3carmodels, experts and aspirations. Thus, withateam ofglobal asoneteam withsharedthey worked values from different andbackgrounds, countries nationalities. DespiteoftheQoros team came staffmembers,international representing 25 Ford, BMWandetc. There were 200 nearly G. FerraraPATTERNSGEOGRAPHIC IN THEAUTOMOTIVE INDUSTRY Fig. 2. Drivers of success and product positioning clearly distinguishable distinguishable positioningclearly and product position, brandidentity exceptional market Finally, hard Qoros to worked create an 2016). relationshipslong-term withthem(Qoros, from thesetop suppliersandbuilt support them for itsfuture. thisway, In Qoros gained these suppliersaboutitsstrategy andreassure was ableto communicate effectively with major suppliers, Qoros’ managementteam andpersonalinfluenceamongexperience manufacturers. With previous industry than halfthatofthelarge, establishedcar a fixed costbaseestimated to befarless remained flexibleandlean,retained extensive strategic outsourcing, Qoros had andIconmobile.Neusoft-Alpine Through Getrag, Benteler, Lear, Harman, Microsoft, such asMagna Steyr, TRW, Continental, Bosch, suppliers. players These includedtop industry controladvanced quality capabilitiesasits companieswithR&Dstrength and service technologyQoros world-leading selected and renewablyincorporate sourced materials. engines to usingfinishesthat interiors it wasseeingresults, inhigherperformance intheautomotivesustainability industry. And manufacturers, to helpachieve greater suppliersand makers, parts with materials landscape, Qoros collaborated to innovate afast-changing, highlycompetitiveIn suppliers. withtheworld’spartnering bestautomotive not beableto achieve thisgoalwithout met globalstandards ofquality. would It days beencommitted to producing carsthat suppliers. Qorosexternal hadfrom itsearliest from wasalsosupported Manufacturing hub inShanghai,MunichandGraz. and Lear. Qoros alsooperated anoperational major automotive suppliersincludingBenteler Parkan Automotive hostingseveral Industry also housedChery, JaguarLandRover, and hub inChina’s automobile industry. The city enhanced Changshu’s profile asanimportant exploited and from Shanghai.It 80 kilometers a prosperous inJiangsuprovince, city about

81 SUSTAINABILITY 82 SUSTAINABILITY world areworld recognizing thatenvironmental successful automotive companies inthe in automotive industry. Thus, themost ishighly relevantThe issueofsustainability adaptive to itsenvironments. global reputation ofcompany innovative and to buildabusiness model, Qoros istrying through life analysis. Adopting cycle such oftheproducts theyproducesocial impact theenvironmental considering worked and a transparent way withoutsiders. Finally ithas Companypractices. information collected in measurement andcontrol for sustainable specific standards. Firm alsoimplemented andcountry- both industry-specific firm’s culture considering andmitigate risks help embedenvironmental into a efficiency planned structuresandprocesses aimedto also It injointdecision-making. stakeholders finding commonground andinvolving out messages, butunderstandingopposition, notonlyaboutpushing trying community customers, employees andtheirsurrounding Since beginning company from haslearned analysis. systems, anddisclosure, reporting life cycle engagement, environmental management leaders. includestakeholder These practices move alongthepathfrom laggards to sustainability, andwillhelporganizations thatwillfosterof bestpractices business model Qoros hasconsidered anumber developing thisinnovative businessIn parent brandandMade-in-China. effects generated byassociation withits towas expected helpdiminishthenegative strategy, andpromotion. Anewbrandimage branding, product,pricing, dealership hardadvantage Qoros onpositioning, worked quality. Attheaimto achieve acompetitive that exhibited standards international of design, safety, and services andconnected vehicles thatwere differentiated intheir jointventures.international Qoros developed from otherdomesticcarmanufacturersand GEOGRAPHY, ENVIRONMENT, SUSTAINABILITY 01(10)2017 CONCLUSIONS ventures. joint and international car manufacturers distinguishable fromis clearly domestic andproductpositioningthat brand identity Qoros hasanexceptional position,with thegrowing In Chineseautomobile market, East. Middle in Central and Western Europe aswell as useful for Qoros to increase itspresence would bevery inSlovakia The experience scale European operation. distribution ofaninitiative to develop afull- as part European dealershipinBratislava, Slovakia, September 2013,itopeneditsfirstIn China market. Europe even before theofficiallaunchin to test thewatersQoros inEast hasstarted brand,vision ofbecominganinternational unique innovative businessmodel. With the to itsthe public, mediaandcounterparts Qoros received widespread attention from Auto 2013, ShowinApril International the15thShanghaiChinese publicduring itsfirstappearanceinfrontAfter ofthe Universal Design Award. accolade, Award includingRedDot and company wonofinternational aseries Following thismajorbreakthrough, the first Chinesecarto achieve sucharating. in theEuro itthe NCAPcrashtests, making The year rating later itachieved afive-star Show2013. Motor Geneva International with itsfirstmodeltheQoros 3Sedanin Qoros Auto Co. Ltd. went onpublicdebut productionoftheQoros 3. series isrampingup sustainable assemblyfacility highly efficientandenvironmentally automobile industry, where itsall-new, inChina’simportance rapidlygrowing inChangshu, aregion ofhighits factory Qoros, whichwasfounded in2007,has purchased anddriven. oftheway theirvehicles are marketed,part business, butitisbecominganintegral responsibility isnotonlygoodfor their Received onApril20 Qoros (2016)http://www.qorosauto.com/en/newscenter/news/article25 16. (2017)http://www.strategyand.pwc.com/trends/2016-auto-industry-trends PWC 15. China(2011) Nielsen GenerationofChineseCarBuyers areThe Next for Looking Style, 14. (2016)http://www.israelcorp.com/AboutUs/OurCompany.aspx IsraelCorp 13. Ireland, R.D., & Webb, J.W. (2007).Strategic entrepreneurship: Creating competitive ad- 12. IHSAutomotive (2017)http://press.ihs.com 11. bargaining: Holmes, collective Unionresponses J. in to restructuring (2004).Re-scaling 10. Holmes, reorganization, J. andlocationalchange: capitalrestructuring (1983).Industrial 9. Gertler, Geography, M.S.(2001).Bestpractice? andtheinstitutionallimitsto learning 8. Gertler, M.S.(1996). geography thechanging ma- oftheGerman Worlds market apart: 7. Frigant, V., &Lung, Y. (2002).Geographical proximity andsupplyingrelationships inmod- 6. Egeraat,C.,&Jacobson,D.and intheIrish (2005).Geography ofproductionlinkages 5. Edensor, T. representation, (2004).Automobility andnationalidentity geography and 4. Dyer, J.H. asasource (1996).Specialized ofcompetitive suppliernetworks advantage: 3. Depner, model:theestablishmentofa theGerman H.,&Bathelt,H.(2005).Exporting 2. Coe, P., N.M.,Dicken, realizing &Hess, thepoten- M.(2008).Globalproductionnetworks: 1. G. FerraraPATTERNSGEOGRAPHIC IN THEAUTOMOTIVE INDUSTRY REFERENCES next-generation-of-chinese-car-buyers-are-looking-for-style.html Georgia Zhuang, Vice President: http://www.nielsen.com/us/en/newswire/2011/the- vantage through streams ofinnovation.BusinessHorizons, 50(1),49–59. auto industry. American Geoforum, 35(1),9–21. the North 251–271. inthe1960s. EconomicGeography,an analysisoftheCanadianautomobile industry strong convergence. ofEconomicGeography, Journal 1(1),5–26. industry. SmallBusinessEconomics, 8(2),87–106. chinery andRegional ofUrban Research, Journal 26(4),742–755. ular production. International 283–303. The roleScottish microcomputer oflogistics. industry: EconomicGeography, 81(3), practice. driving Theory, Culture &Society, 21(4–5),101–120. Evidence from theauto industry. Strategic managementjournal, 17(4),271–291. cluster inShanghai.EconomicGeography,new automobile industry 81(1),53–81. tial. ofeconomicgeography, Journal 8(3),271–295. th 06 Accepted onFebruary 9 , 2016 th , 2017

83 SUSTAINABILITY 84 SUSTAINABILITY GEOGRAPHY, ENVIRONMENT, SUSTAINABILITY 01(10)2017 Graziella journals. strategy board and sheisintheeditorial ofmany relevant ongeography,articles andcorporate internationalization strategy. andcorporate internationalization Shepublishedmany State College (USA).Herresearch interests geography, concern Orsola BenincasaofNaples. Shewasvisitingresearcher atSalem

Ferrara is Professor ofEconomicGeography atSuor