Cost Competitiveness and Efficiency of the Automobile Industry in China: An Empirical Examination

China has been the world’s leading manufacturer of automobiles since 2010, after having to rebuild the industry from scratch in the 1970s with an initial reliance on technology from Russia and Eastern Europe (McKinsey 2015). China’s success in this sector has been largely attributed to favourable government policies promoting the automobile industry, contributions made by foreign joint ventures and the cost leadership business strategy pursued by automobile and component manufactures in the country (Hass 1987; Dent 1996; IBISWorld Industry Report 2016). Currently, China’s automobile sector is a pillar industry and it plays a significant role in the economic development of the country. Therefore, it is critically important for China’s long-term prosperity and economic growth.