Four Decades of Foreign Direct Investment of Automakers in China: Growth, Challenges, and Transformation

By BAO Ge and CHI Yaxin

The auto industry is characterized by its extensive supply chain and complex component ecosystem, serving as a direct reflection of one nation's industrial capabilities. Since the Reform and Opening-up, coinciding with the end of the Cold War and the acceleration of globalization, foreign automakers have capitalized on China's heavy industry foundation, established by the planned economy, to gradually invest throughout the industrial chain—from basic to advanced stages. This process has witnessed China's transformation from a minor player to a global leader in the auto industry. From being on the periphery of the global auto landscape to being at the central, China’s auto industry has benefited significantly from the active participation and contributions of foreign automakers. Looking ahead, as both the global and Chinese auto markets undergo profound shifts, foreign automakers will face increasing competition in China. Nevertheless, they are poised to remain key players in driving the intelligent and advanced transformation of China's auto industry.