The New Economy in East Asia and the Pacific

By Peter Drysdale | Go to book overview

11

Automobiles: an industry study

Roger Farrell and Christopher Findlay


INTRODUCTION

Rapid change is occurring in the regional patterns of trade in the automotive industry. There is evidence, for example, of Association of Southeast Asian Nations (ASEAN) export success into markets in Japan, not only for motorcycles and standard components, but also for complex components (Farrell and Findlay 2001a). Another significant change is the emergence of China as a competitor in those markets. These results illustrate the scope for market access in Japan for developing country suppliers, such as those based in ASEAN.

Farrell and Findlay (2001a) have pointed out that there is interesting further work to be done on the management of these international transactions. One issue is whether the forms of the transaction (for example, arm's length versus another intermediate form) vary significantly according to product type or the characteristics of the buyer, and Farrell and Findlay (2001 a) also stressed that the management of the procurement process is changing rapidly, with greater use of new information and communication technologies (ICTs).

The emergence of global electronic markets and online auctions in the automotive sector has been a commonly cited example of the new applications of ICTs. Farrell and Findlay (2001a) identified the following priority topics for further work: the scope for producers based in developing economies to benefit from the diffusion of ICTs; the application of ICTs in the trading relationships with developed economy markets, like those in Japan; and the manner in which the application of ICTs might vary between product type and between type of purchaser. It is these questions which are taken up here.

We begin with a broad discussion of changes in the organisation of the automotive industry and the requirements for ICT application. We then review the different ways in which ICTs may affect the automotive sector and the different models that may emerge. We note some key differences between US and Japanese approaches to the application of ICTs in this sector. Finally, we examine the implications for developing country suppliers of automotive components.

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