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er the Indian government did not define any limitation for on foreign ownership, instead 123 per cent tariff rates on import cars were forced multinationals to set up their assembly plant fully within India. And a high tariff on finished components also was another issue that multinationals prefer to find their supplier within domestic firms. (Kim, 2004)

Despite of all mentioned problem in India, multinational car makers seems still have a positive view about the Indian market. The potential existing market is there, but the matter is that when it will become visible.

Chinese auto industry

Following the economical reform in China, the Chinese policy makers focused on auto industry as a symbolic sector which shows the industrial development within a country. The need for technology and knowledge caused them looking for foreign partner to provide the required technology by setting up assembly plant which also generate and improve numbers of domestic firms as the suppliers to support the main assembly plants. So, in the mid-1980 three main cities of China (Beijing, Guangzhou and Shanghai) established a joint-venture with foreign auto makers supported by central and local government. (Thun, 2004)

Each local government aimed to improve the local supplier network by its JV, but the assembly plants were looking for the better quality and lower price. Therefore in contrast with the local government and despite of geographical advantages of supplying from local firms, assemblers were dependence on outside supplier and most of them imported 100 per cent of the components from outside unless they were forced by Chinese government to increase their required components from domestic firms. But even after the time assemblers shifted from outside supplier to domestic firms, the local government aim to improve their local network were failed as the JV sourced their parts from other regions. Therefore, as of 2003, just Shanghai could relay on their local auto sector and even though it did not meet the international standards, it became a dominant firm in Chinese auto market. (Thun, 2004)

The Shanghai success was the result of well support and strategic plans of local government and Shanghai Automobile industry corporation (SAIC). In 1984, when the Shanghai established a joint-venture with Volkswagen (VW), non of local firms were able to supply the required component for the assembling plant and after two years their share increased by just 2.7 per cent. (Li, 1997) No significant achievement after two years caused 'Shanghai municipal government began to re-evaluate the problems within the sector and the capacity of individual firms to solve these problems.' (Thun, 2004) Consequent of problem solving process, they discovered two necessity preconditions to facilitate improvement in domestic firms.

The first one was 'a reorganization of the municipal bureaucracy responsible for auto sector oversight'. They have set up an Automobile Industry Leading Small Group in order to control the local actors. (Li, 1997)

The second precondition 'was the capital accumulation and investment'. To solve this problem the local government defined a 'localizat本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。