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Bin Guo, Qiang Li and Xiaoling Chen

This chapter analyses the rise to market leadership of Geely, a privately held domestic automotive producer in China. Geely presents an interesting case of a company that was able to survive and grow in the face of market competition from joint ventures and state-owned enterprises. The chapter aims to contribute to the literature on technological catching up in two ways. The first is to examine the impacts of the context-specificity of China on domestic firms’ capability building and technological catching up. The other is to analyse the role of low-cost manufacturing capability and to explore how such a capability may be used as an initial step to support subsequent growth within the context of a large and emerging economy. The study highlights the impact of context-specificity in terms of the size and segmented nature of the domestic market on the ability of firms to learn and accumulate capabilities. This study also suggests that in technological and capital-intensive sectors, the rise of new market leaders is favoured when technological knowledge is largely embodied in machinery or other physical artefacts for production processes and when the industry structure is highly modularized and has evolved into an integrated and mature production system along the industry value chain.