Social And Cultural Environment On The Corporate Network Built - For Example, Shanghai Volkswagen Supplier Network

Recent work has been to analyze the establishment of cooperation work of interrelated firms, whose continued growth and the way they secure reproduction. Evidence shows that the establishment of new industry networks can hardly be jumpstarted through policy initiatives alone. In the early stage of a network, the factors such as outstanding entrepreneurial activities, the willingness to take the risk of starting up new ventures and ability to tap into areas outside the established technologies and markets had been decisive instead of the factors such as agglomeration factors and networking synergies etc., which are more important in the later stage of growth. However, characterized by a hierarchical social division of labor, organized in tiers around powerful car manufactures, very strong ties and uneven power relation are very evident in the automobile industry. Due to its organization around a focal company, the automobile industry is highly responsive to network formation when entering a different institutional and 'cultural' context, which implies that the genesis of a new automobile industry cannot be planned at all, especially in the context of a developing country, such as China, which still has characteristics of a planned economy. It seems useful to re-investigate the relation between economic development, multinational firm strategies and state intervention in this respect. Drawing from the case of the German automobile industry and its supplier system in Shanghai, in which German firms play an important role, empirical evidence will show how a new network is being established and how it is supported by the state in its various forms. The multi- dimensional approach to the network will provide a more nuance understanding of the evolution and growth of a network in the earlier stage. Then development of network in Shanghai automobile industry will be distinguished along its vertical, horizontal, external, institutional and power dimensions. Here, 'culture', policies and planning, institutions and power, and theirimportant roles in shaping the economic action and interaction, especially in its relation to issues of power and institutions, will also be evidenced. In an international context of production organization, this provides an alternative to a global commodity chain analysis.Overall, the establishment of the Shanghai automobile industry network has been largely planned by international automobile producers, in the case of VW, making a strategic move to extend their production system and market reach to China. Thus, a focal network is developing, which is characterized by a growing vertical dimension of suppliers and service providers. These were required by VW to establish production in China, to fulfill local- content regulations, which were also demanded by Chinese government. The horizontal network dimension is at this point still in a stage of infancy but it changes quickly as GM has also established production in the region and attracts its own suppliers.The complex relationships between economic development and politics become obvious through the role of SAIC, the dominant Chinese actor in Shanghai automobile industry. SAIC is largely owned by the municipality of Shanghai and is thus shaped by the city's general policies and strategies with respect to future development. At the same time, SAIC is involved in a large number of joint ventures with foreign automobile firms and parts producers, serving to closely intertwine economic and political aspects. What makes foreign direct investments (FDI) in Shanghai's automobile industry even more difficult is that the conventions, rules, norms and expectations in human interaction are different from those, which the German firms are used to. This, in turn, affects the organization of production and labor processes within and between firms and the ways how firms can get knowledge about their local markets. The successful establishment of 'inter-cultural' communication in the Shanghai automobile industry network therefore requires the development...