Production System of Beijing Hyundai Motor in China: Catch up Strategy for a Latecomer

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초록

The success of Hyundai’s operation in the Chinese automobile market is caused by high quality and low cost production strategy. The company’s success in China stems from many institutional contexts that may be attributed to the following factors: 1) expedient construction of the overseas plant. BHMC started production within 7 months after ratification of its joint venture; 2) early established production capacity to cope with the abrupt increase in demand; 3) operation efficiency at a lower cost with improved quality. BHMC’s production model from Hyundai guaranteed its operation efficiency; 4) an efficiently integrated supply system. In the early stages of the production, the Korean suppliers moved to accompany Hyundai with its push into China, which played a role in stabilizing and supplying qualified parts to BHMC; 5) an established optimal dealer distribution to capture fast growing demand from small and medium cities; 6) introduction of new modern models. BHMC were allocated the responsibility for the assembly of advanced models. The reduced modernity gap of models between home and the local partner helped to gain a competitive edge in the Chinese market This features a typical low-road strategy based on minimizing worker involvement and maximizing automation, which is a sharp contrast to a lean production system. From the beginning, it is obvious that BHMC struggles to improve its current market position amid fierce competition. In this regard, the company is faced with raising wages and labor disputes which must be modified for this management strategy to have long-term success in the Chinese automobile market. It is difficult to predict how the company can escape from it and become a competitive advantage.

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