A decade of astonishing growth has catapulted China past Germany and Japan to become the world’s second-largest market for automobiles, trailing only the United States. Global OEMs such as GM, Toyota Motor, and Volkswagen still command the lion’s share of sales in China. Nonetheless, the impressive inroads of homegrown upstarts such as Chery Automobile and Geely in the local market are fueling a desire among China’s OEMs to become not only domestic but also global competitors—aspirations encouraged by the government. Such ambitions aren’t far fetched: as recently as 2004, China was a net importer of automobiles; in 2005, the country became a net exporter, and in 2007 it exported over half a million cars and trucks, the majority of them Chinese-branded vehicles shipped to developing markets around the world.

A disquieting body of evidence, however, suggests that China’s automakers aren’t ready to go global. Chinese vehicles have languished in recent J. D. Power and Associates Initial Quality Study (IQS) results, and the recent models of several Chinese automakers have scored poorly in independent safety tests. Our own experience with some of China’s leading OEMs has uncovered significant shortcomings, including insufficient quality- and talent-management approaches, as well as a lack of...