The impact of the government policy on the Chinese electric gehicle industry and business strategy management : Case of FAW

Abstract: Background: The electric vehicle industry is an emerging industry worldwide. In China the development of the electric vehicle industry is rapid. The government policy is of great influence on the economy in the Chinese context. The Chinese electric vehicle company has to design the right business strategy to maintain and enhance its competitive advantages in order to respond to challenges. Aim: This study analyzes the five competitive forces of the Chinese electric vehicle industry and the effect of the government policies on the Chinese electric vehicle industry. The research uses Porter’s Five Forces model and Porter's Generic Strategies theory to give the strategic guidance to the company. Definition: In this thesis, “Electric Vehicle” referred to the electric drive vehicle used for transporting passengers, which is designed to typically have four wheels, and to have seating for one or more people. Method: The authors use FAW Electric Vehicle Company as the case company in order to achieve the purpose of this research. The qualitative method is used in this study. The authors collect primary data through three interviews with the company managers. Results: This research reveals how the government policies affect the profitability of the industry and the company through changing the five competitive forces. FAW Electric Vehicle Company should maintain and enhance its relationship with the government. It should also maintain and enhance its competitive advantages through implementing cost leadership and differentiation strategies in different stages. Five appropriate search terms: Electric Vehicle Industry; China; Government Policy; Porter’s Five Forces model; Porter's Generic Strategies