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R&D management of Chinese auto industry

(chinadaily.com.cn)
Updated: 2008-04-14 16:57

It is widely accepted that domestic companies must step up their self-R&D capacities. However, in particular, after the central government has played up self R&D and independent innovation, all people and organs, including governments and business communities, devote a lot to R&D, especially in hardware and CAX (CAD, CAE, CAM) tools. Some even do better than those overseas R&D centers, if in terms of hardware only. It is a mater of R&D engineer team building up. With growing overhead costs, overseas experts and local talents have become popular resources in the human resources market. However, despite efforts, results show that no substantial progress has been made in R&D fields. Some people began to wonder: Whether China is going in a wrong direction? How to conduct independent R&D? The texts below are views concerning R&D diagnosis from Arthur D. Little, the world's oldest premier management consulting firm.

How to conduct the automotive R&D diagnosis

According Arthur D. Little, total R&D cost of BMW, MCG, PSA, Renault, Toyota, Volvo and VW accounted for an average of 5.4% of their total revenue. But it is proved that although most companies invest a lot in R&D, the results are quite different. In order to reach the best effects, the management team needs better R&D management efficiency, which means investing every penny in the right place.

Competency of the automotive industry does not lie with any leader and core team. In order to tackle innovation challenges and control the cost, China's OEMs and suppliers are trying to enhance their efficiency and capability: (See Figure 2)

Figure 2 Improving R&D efficiency

Source: Arthur D. Little

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