Some times when economic conditions call for changes, it might be easier to achieve them if the government is a dictatorship rather than a democracy. Witness what is happening with the Chinese auto industry.
The country has too many small vehicle manufacturers. So the government, seeing the need to have bigger, more efficient producers to compete in the global market, is encouraging state owned automakers to merge with smaller producers.
Example: Changan Automobile Group is merging with Aviation Industry Corp. of China. Aviation offers two brands of vehicles and has joint ventures with Suzuki and Mitsubishi. This is the first major merger since Shanghai Automotive Industry Corp. (SAIC) merged with Nanjing Auto Group in 2007.
For the most part, Chinese automakers are small. The country’s biggest producers are General Motors and Volkswagen. The government’s plan calls for mergers to create two or three large Chinese automakers that can produce about 2 million vehicles a year so that China can compete globally. While China’s domestic manufacturers do export to countries in Asia, Latin America and Africa but none have been able to crack the American market due to stringent safety and environmental standards.
However, even in a dictatorship there can be opposition. Chinese attempts to merge companies is going slowly because leaders of city and provincial governments that own their own auto manufacturers don’t want to see a reduction in their companies (and profits).
More can be found at the Detroit News. Some pundits say that the Chinese market will have to experience a sales slump to encourage more mergers before major competitors can be established. That may be a while: The Chinese auto market is massive and sales in October exploded by 72 percent from the same period last year. About 1.2 million vehicles were sold, according to the China Association of Automobile Manufacturers. So far this year a total of 10.9 million vehicles have been sold.