The pattern of internationalization followed by the major carmakers can so far be split into three stages. The first stage is export. At this stage the goal is to create a car which fits into a world-wide car cartegory. After the expansion of exports comes the second stage. This is the setting up of transplant in major market regions. The automotive companies in the world is now confronting a third stage in the process of internationalization, namely globalization. It is mean complete localization of transplant one hand and the establishment of global business network another hand.
Exports are the engine of the contemporary Korean motor vehicle industry's success. Korea emerged in the 1995 ...view middle of the document...
Korean auto exports to North America decreased 14 percent from 234,904 vehicles in 1994 to 203,785 in 1995. Shipments to North America accounted 20.7 percent of total, down from 31.8 percent. Western Europe is expected to become one of Korea's fastest growing auto markets next year. Korean auto exports to Western Europe were 267,058 vehicles in 1995, up almost 100 percent from 138,560 in 1994. This stage shows a clear pattern that direct investment by Korean firms in overseas market stated in sales, followed gradually in the manufacturing area by joint ventures with imported countries. That is, direct investment in maunufacturing started in the mid 1980s and then accelerated in the 1990s, whereas the number of newly established sales facilities increased rapidly since early 1990s
Investment in R&D facilities stated in early 1990s, but the number has so far remained negligible. However, Korean firm accelerated set-up the R&D facilities in order to the transfer of advanced technologies in advanced carmakers' countries. The improving ability of high technologies is one of the precondition of survive in the competition of the world market.
This sequence(sale-manufacturing-R&D) is essentially same as the one observed in internationalization of Japanese automobile industry, although the timing is somewhat different; The internationalization of Japanese apparently carries out in sequence. The stage of manufacturing and R&D in the internationalization by Korean firms move onward simultaneously.
This paper tries to describe and analyse patterns of internatlionization by Korean carmakers. In the following, I will first review the histrorical and on-going development of internationlization in the automobile industry. Next, based on this observation, I will briefly analyses of an individual firms mutlinational activities.
Strategy for Export; Strategic Allince of Korean Automobile Industry
The growth in the Korean motor vehicle industry has been remarkable. Korea emerged in the 1980s as a significant world producer. Automobile output increased almost thirty-fold between 1978 and 1995, from 85,693 units to 2,613,000. From an examination of present trend, there seem to be three strategies that Korean automakers could follow in terms of export oriented growth.
1. A Technological and financial link between a domestic corporation and multinational automakers.
2. A Joint venture between a domestic corporation and a multinational vehicle corporation whose production strategies were partially influenced by the concept of world car.
3. The export promotion policies by the government accelerated in substance the internationalization. That is, wages control, a protected home market, and government subsidies have helped in the creation of this dynamic new industry.
The successful private conglomerates from the Third world to organize and benefit from technological links with multinational automakers is undoubtedly Korean firms. Hyundai,...