China and México: competition for the United State automobile Market

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Abstract:

China and México: competition for the United States automobile Market

Lourdes Alvarez Medina
Francisco Javier García Pando

The emergence of the People´s Republic of China (China) in the global automobile industry has given way to a great deal of speculation on what strategies Chinese car makers will pursue in entering the United State of America (USA) market, threatening the established order among the automotive producers in México.

Since the automobile industry is considered by the Chinese government as “the typical- capital- and technology industry , to encourage export of cars and components or investment abroad and good for enlarging exports and being significant for the transformation of foreign trade and economic cooperation” (Annual report, 2010). The aim of this paper is to study the trade of automobiles and components from China and Mexico toward the USA market. This country is the main partner of the automobile industry in Mexico; however China has been increasing its exports component in the last years and now it may be seen as a rival contending for the same market.

The study is made using the methodology developed by the Comisión Económica para América Latina y el Caribe (CEPAL) and its data base Magic (CEPAL, 2010). Trade is studied at a 10 digits disaggregate level, according to the Harmonized Tariff System of the United States in order to understand which cars and components are being imported from each country, the dynamics and how they are contending. The export similarity index of exported autoparts from China and Mexico to the USA is calculated to compare the trade structure of the two countries.