Govt

How has government policies affected the industry? What is the justification for current policies?

This report focus on three main automobile producers is China, Korea and Japan so the government policies also concentrate on these markets and the policies relative on tariff or nontariff barriers and quota. First of all, three countries are member of the Free Trade Agreements (FTAs) therefore; under the FTAs the low tariff policy is established in order to encourage the export and import of automobile market. In generally, this policy will bring benefits for foreign producers but this is problem for the domestic producers. For instance, South Korea has become a developed market for foreign such as BMW, Mercedes and Audi because of low tariff. This policy leads to external brand automobile products are cheaper in South Korea and the local buyers tend to choose brand from oversea than domestic brand. Hyundai and Kia are the popular brand in South Korea, they also disagree with policy because it effects to profit of these companies. In fact, according to Kim (2013) reported that, the world largest luxury automakers as BMW, Mercedes and Audi sold increased at least 25 percent in first at Korean market and Hyundai sold fell 4.7 percent in the period. Three largest Germany companies also received 40 million won in Korea more than Hyundai got 31,444 million won. Moreover, the low tariff policy in South Korea is also attracting exporting from US manufactures. Under the US and South Korea Trade Agreement, US automobile companies have many opportunities to enter to Korea market because of eliminates tariff or duties and non tariff barriers to US exports. Secondly, the other large Asia automobile industry is Japan. After this country participate in FTAs with markets in order to decrease tariff on Japanese automobile import. The low tariff policy in Japan would increase profit of producers and also raising in export of products. According to research of McAlinden and Chen...