Before 1950, the Chinese automobile industry did not exist, let alone manufacturing passenger cars. Currently, the Chinese automobile market has become the largest market in the world. Chinese companies have launched their own brand of passenger cars to compete with other international companies in the world only in 30 years.

In our research, we analysed the development of the Chinese automobile industry from the perspective of knowledge transfer. This study employed qualitative method to conduct the research and a Chinese automobile company was taken as an example. To analyse the process of knowledge transfer, we created an analytical model which is based on previous research. The primary data to test the model comes from three interviews, which were conducted with employees working as manager and engineer in the Chinese automobile industry. The secondary data was collected to complement the primary data. All data were used to present a holistic view of the process researched.

Our results show that the rapid growth began with the attention of the Chinese government who set the Chinese automobile industry as the "pillar industry" of the Chinese economy. Then, the rapid development of the Chinese automobile industry greatly depends on the process of cross-border knowledge transfer, which is significantly influenced by the Chinese government.

Our main contribution is that the process of knowledge transfer can work well within an environment controlled by the government, in spite of lacking the enablers examined in previous studies (e.g. trust). Another contribution is the analytical model we created to analyse the whole process of knowledge transfer.