Up-and-coming local manufacturers and established companies from the Triad countries are competing for dominance in these vast market segments. A variety of tensions are revealed within the two models, relating in particular to labour policies. Both models seek to combine low wages and a reliance on low-cost supply chains with simplified product architectures.
Their stability is fragile, however, with one solution involving employee upskilling to increase productive system efficiency. Los dos modelos buscan combinar salarios bajos y cadena de suministro a bajos costos, con arquitecturas de producto simplificadas. This has created new market segments for relatively higher-quality, but β by international standards β still rather inexpensive cars.
Such productive models could, for instance, focus on minimizing input costsβin particular, the labor costs. Or they can rely on increased share of sourcing from low-cost suppliers. They could also be based on product architectures that simplify the product and, thereby, reduce production costs. And they could, of course, combine several of these cost-reducing measures. Both carmakers, within the last decade, have not only managed to attain relatively strong positions in their domestic markets, but have also intensified their attempts to expand internationally.
First, we show that successful low-cost productive models represent specific configuration of labor relations, productive organization and product policies. This implies that simply focusing on low labor cost is not yet a viable approach. We further argue that the development of such low-cost productive models requires specific societal conditions regarding the demand structure and also the local industrial base.
Developing relevant and sustainable low-cost productive models is not an easy task for the indigenous producers from emerging economies. Given the lack of own product development, the domestic producers often have to rely on Western engineering firms and suppliers, what makes it difficult to maintain a low-cost approach.
