Reverse Outsourcing of Research & Development: A Growth Path of Chinese Firms—Based on the Case Study of Automobile Self-Brand in the Yangtze River Delta Region

Abstract

Prior research has often regarded outsourcing as a one-way game led by enterprises of developed countries. This paper presents a new pattern of outsourcing appearing in practice, referred to as reverse outsourcing. Reverse outsourcing means that firms in low-wage countries become project owners and firms in high-wage countries are vendors. Establishing the game model, we find that the market volume of developing countries and the fierce competition in markets of developing countries and developed countries are preconditions of reverse outsourcing, as proved by the example of two Chinese auto manufacturers, Chery and Geely. Studying the progress of independent technology through reverse outsourcing, we also find that reverse outsourcing is a feasible strategy for firms of developing countries.