The Development of Automotive Parts Suppliers in Korea and Malaysia: A Global Value Chain Perspective

Abstract

This contribution aims to investigate whether, how and why national automobile policies in Korea and Malaysia have generated industrial upgrading and increased competitiveness of the domestic automobile components industry to the point of world class suppliers. The study applies a global value chain perspective on the development of national automobile firms and industries in developing countries. The contribution argues that the rise of powerful multinational companies (MNCs) who were automobile suppliers of systems or modules based on advanced proprietary technology and branding has made it more important than ever that upper tier suppliers evolve and/or locate in global value chains to remain competitive. No such automobile suppliers have yet emerged out of the local Korean and Malaysian automobile component industry, but world class foreign automobile suppliers have established operations especially in Korea. Hence, both the Korean and Malaysian vehicle makers will depend upon and have to ally with leading foreign automobile suppliers to achieve or sustain competitiveness in local, regional and world markets.

Keywords:

• Automobile
• global value chain
• Malaysia
• South Korea
• suppliers