Plastic Cars in China? The Significance of Production Location Over Markets for Technology Competitiveness

This paper demonstrates the significance of location-specific differences in manufacturing characteristics and in consumer demand for technology competitiveness. It looks, in particular, at the economic viability of emerging polymer composite automobile body technologies if produced in the United States (U.S.) versus if produced in the People’s Republic of China (P.R.C.) The results show that polymer composite bodies, when produced locally for the local market, are competitive for significantly fewer cars in the P.R.C (7%) than in the U.S.(29%). Despite consumer demand characteristics in the P.R.C. being more favorable for composites, differences in production characteristics between the two locations dominate the overall effect. These results suggest that in cases such as automobile bodieswhere markets and manufacturing location are tightly coupled, firms may need to put as much emphasis on understanding the impact of local production differences on technology competitiveness as in understanding local markets.

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