A Study Of Manufacturers’ Sourcing And Pricing Strategies Considering Domestic Substitution Under The Risk Of Supply Disruption

With the steady development of new energy vehicle technology and strong government policy support,China’s new energy vehicle industry is developing very steadily.As electrification,intelligence and grid connectivity continue to develop,demand and performance requirements for key automotive chips are increasing exponentially.Core chip research and development requires a large amount of capital investment and long-term accumulation,and the industry barriers are high,which have been concentrated in the hands of international major manufacturers including NXP,Infineon and others.Along with the global automotive supply chain system in recent years suffered from trade,technology decoupling and other sudden disruptions,some core chip supply disruptions have seriously impacted the normal operation of domestic automotive enterprises.In this context,domestic substitution strategies and other effective ways to alleviate supply shortages are gradually being emphasized,and vehicle manufacturers need to consider domestic substitution for effective procurement and pricing strategies to reduce and mitigate the risk of possible supply disruptions in consideration of maximizing their own interests.In view of the above practical issues related to the supply of basic chips for car manufacturers,it is important to conduct a detailed study on strategies to effectively mitigate chip shortages and avoid the risk of supply disruptions.Therefore,this thesis will first examine the impact of government subsidies from the manufacturers’ perspective,based on the following factors: domestic substitution and innovation of domestic suppliers,dual sourcing and single sourcing strategies of domestic suppliers,and benefits in the event of supply disruptions due to unforeseen circumstances.Second,based on the increasing share of domestic chips in manufacturers’ purchasing decisions and consumers’ differentiated purchasing decisions for overseas and domestic branded automotive products,a decision model is constructed with the help of consumer utility and other methods,and numerical analysis is used to study the impact of each parameter,such as quality differences and brand preferences,on supply chain members’ profits and optimal pricing decisions.The results show that,when there is a risk of supply disruption,domestic substitution strategies can lead to changes in the interests and decisions of competitive foreign suppliers,domestic suppliers and vehicle manufacturers,and that the decisions of supply chain actors are more affected,and increased investment in policy and innovation can improve the resilience and security of domestic supply chains in key markets for new energy vehicle chips.In addition,manufacturers in the risk of supply disruption from overseas suppliers,domestic substitution into competitive markets,consumer sensitivity to quality differences,brand preferences and other influencing factors will have an impact on manufacturers’ pricing behavior and equilibrium revenue,as the quality of domestic alternative brand products and brand influence,will attract more consumers and enhance consumer demand and recognition of domestic alternative products.Thus,domestic substitution can form a virtuous cycle in the market.