【正文】 rcent of the industry 抯 profits, yet there are few established players in China (Exhibit 4).Finally, indirect benefits would flow to the global carmakers from the increased specialization and scale of the Chinese contractors, whose chief advantage is that they can develop and use their expensive technology and capacity to serve more than one customer. Given the size and automation level of the relevant assembly plants in China, doubling a plant 抯 output would translate into a 5 percent savings in unit costs. Ultimately, global brands may draw on this Chinese resource to supply other markets with goodquality, petitively priced cars, which would in turn build the scale of Chinese factories to an optimal costreducing level.6 / 10In many ways, this assetlight strategy would mimic the success some global automakers have had with recent sales and distribution initiatives. Since mid1999, dealers of Audi, GM, and Honda cars have invested more than $250 million in facilities and other infrastructure in China. Audi exemplified the successful implementation of this strategy when it became heavily involved in developing the sales and management skills of Chinese firms, but without investing capital in the process. The pany took more than a year to select its 32 dealers, seeking entrepreneurs from the auto industry and elsewhere who were market oriented, ambitious, and able to finance their own premises and growth.Contracting out something as fundamental as product manufacture always raises the specter of creating your own petition. Companies that adopt the assetlight strategy naturally hope that the manufacturers they nurture won 抰 eventually beat them at their own game. Although little is certain in business, global car brands can find much to allay their concerns. In the car industry, it is skills in design, brand marketing, and distribution, as well as a very few key ponents, notably highperformance engines, that help panies earn their petitive position. Their profits flow from sales, service, finance, and leasing. Outsourcing assembly doesn 抰 force panies to transfer their skills in any of these key areas, nor should it put such advantages at risk, which is why panies like Cisco Systems, HewlettPackard, and IBM feel secure in outsourcing the manufacture of most of their highend hardware systems.MAKING IT HAPPENContracting out production isn 抰 altogether novel for global carmakers: Valmet, in Finland, makes some Porsche Boxsters。D, product development, and sales and marketing. In addition, DaimlerChrysler, GM, and VW plan to expand。1 / 10Global carmakers could manage their costs and capital in China—and gain a strategic option for their global operations—by contracting out the manufacture of whole vehicles to Chinese panies.PAUL GAO The McKinsey Quarterly, 2022 Number 1Faced with the prospect of stagnant global sales over the next five years, the world 抯 biggest carmakers are jockeying for a share of one of the few buoyant national markets. China 抯 domestic car sales, growing at more than 10 percent annually, will probably account for 15 percent of global growth over the next five years. So far, global automakers have pursued successful jointventure strategies by investing heavily in assembly plants operated by Chinese partners. But as petition in China heats up, a new tack may be needed in the quest for profitable market share.An assetlight strategy would have the major auto panies concentrate on what they do best—developing products and brands—while contracting out not just ponent supply but also the whole assembly process to Chinese automakers that can capitalize on petitive cost structures. Although scaling back capital investment in such a healthy market might seem bold, outsourcing manufacturing is neither unmon in other industries nor entirely unprecedented in this one. Moreover, the nature of the Chinese auto industry and market makes outsourcing particularly attractive. Outsourcing might also help Chinese automakers take their first steps to being a global manufacturing resource. But if the strategy is to work, global carmakers must build up the skills of these Chinese pa