Dominating the World: China and the Rare Earth Industry
Authors: Nabeel Mancheri, Lalitha Sundaresan and S. Chandrashekar
To read the complete report click here
The available evidence suggests that China’s current domination of the global Rare Earths (RE) Industrial Ecosystem is the result of a well-thought out carefully crafted dynamic long term strategy. China has cleverly used the dynamics of the transition of the RE industry from the growth into the maturity phase of the lifecycle to build a dominant presence in most value chains of the RE ecosystem. China controls not only the raw materials but also the production of key intermediates that go into many hi-tech growth industries.
In contrast the US which actually pioneered many of the breakthrough discoveries in RE materials has allowed its once dominant position in RE to erode. It is now dependent on Chinese largesse to make sure enough RE materials and intermediates are available for its use. The US today has no industrial capacity in RE allowing global market dynamics to move all of them to China.
The use of RE in critical green products like hybrid cars, wind mills, lighting, fuel cells and many other advanced consumer and industrial products suggests that the industry may grow considerably. China is well positioned to use its dominant position in RE as a part of its larger global strategic aims.
Through the tracing of the evolution of the RE industry in China the study also sheds light on how strategy is formulated and implemented in China. The other thing that emerges clearly from our study on RE in China is that strategy implementation is closely linked to strategy formulation. China seems to have in place methods and processes to ensure that the various arms of the government associated with the implementation of strategy, function in an integrated way to ensure that Chinese interests are well protected.
In the case of Rare Earths, China has successfully caught up and even overtaken major global players.