Achieving the Low Cost Strategy Through the Innovation in the Product Architecture and Inter-Firm Relationship - A Study of Chinese Cars Made By Geely and its Suppliers

Abstract

The purpose of this paper is to put forward the hypothesis that a transformation from closed integral architecture to quasi-open modular architecture contributes to the achievement of a low-cost competitive strategy by Chinese carmakers. Since 2006 China has become the 3rd largest player in the automobile industry in terms of production. Emerging Chinese carmakers have developed an innovative approach to product architecture so as to compete effectively with their foreign counterparts. This paper has both theoretical and empirical objectives.

Keywords: Innovation, product architecture, inter-firm relationships, Geely, the Chinese car, the automobile industry

JEL Classification: 032, 033, L22, L62