Abc Automotive – Expansion in China (Foreign Direct Investment in China
Abstract
Foreign Direct Investment (FDI) is the process of one entity from an economy investing asset to another entity from other economy so as to expand its business operation in that economy. China is one of the hot foreign direct investment destinations for many world investors. Ever since the implementation of the reform and opening up policy, China has launched a series of policies to create a favorable macro-environment and policy environment to attract FDI in many industries. China’s car manufacturing industry is just one of them. Many world famous car manufacturing company have entered Chinese market to explore market share. ABC, a German car manufacturing company, also plans to launch its factory in China after making an thorough analysis of the car manufacturing industry environment in china, both macro aspect and micro aspect. This paper illustrates ABC’s entry model and elaborates its long-term development strategy which to be implemented in the future.
Contents Abstract 2 1. Introduction to Foreign Direct Investment (FDI) 4
1.1 FDI in China 4
1.2 China’s FDI Policy 4
1.3 FDI’s contribution and influence on China 6
1.4 FDI and foreign trade balance in China 6 2. Introduction to Chinese car industry 9
2.1 Car manufacturing scenario in China before 1978 9
2.2 Car manufacturing scenario in China after 1978 9 3. Background of ABC automotive 12
3.1 Mission and Vision 12
3.2 Objective 13
3.3 Current Organization Structure 13 4. Justification of expansion of ABC Automotive in China 15
4.1 SWOT analysis of ABC Automotive in China 16
4.2 PEST analysis (MACRO environment analysis) 18
4.3 Five Forces Analysis(MICRO environment analysis) 20
4.4 Entry mode 21 5. Long term strategy for FDI expansion in China 22
5.1 Market analysis 22
5.2 Production strategy 23
5.3 required investments 23
5.4 Organization changes with the joint venture in China 24
5.5 Employee structure and training scheme 25
5.6 Contract administration 26
Foreign Direct Investment (FDI) is the process of one entity from an economy investing asset to another entity from other economy so as to expand its business operation in that economy. China is one of the hot foreign direct investment destinations for many world investors. Ever since the implementation of the reform and opening up policy, China has launched a series of policies to create a favorable macro-environment and policy environment to attract FDI in many industries. China’s car manufacturing industry is just one of them. Many world famous car manufacturing company have entered Chinese market to explore market share. ABC, a German car manufacturing company, also plans to launch its factory in China after making an thorough analysis of the car manufacturing industry environment in china, both macro aspect and micro aspect. This paper illustrates ABC’s entry model and elaborates its long-term development strategy which to be implemented in the future.
Contents Abstract 2 1. Introduction to Foreign Direct Investment (FDI) 4
1.1 FDI in China 4
1.2 China’s FDI Policy 4
1.3 FDI’s contribution and influence on China 6
1.4 FDI and foreign trade balance in China 6 2. Introduction to Chinese car industry 9
2.1 Car manufacturing scenario in China before 1978 9
2.2 Car manufacturing scenario in China after 1978 9 3. Background of ABC automotive 12
3.1 Mission and Vision 12
3.2 Objective 13
3.3 Current Organization Structure 13 4. Justification of expansion of ABC Automotive in China 15
4.1 SWOT analysis of ABC Automotive in China 16
4.2 PEST analysis (MACRO environment analysis) 18
4.3 Five Forces Analysis(MICRO environment analysis) 20
4.4 Entry mode 21 5. Long term strategy for FDI expansion in China 22
5.1 Market analysis 22
5.2 Production strategy 23
5.3 required investments 23
5.4 Organization changes with the joint venture in China 24
5.5 Employee structure and training scheme 25
5.6 Contract administration 26
References: [9] Ding Qingfen. China expects exports to slow in 2011. China Daily. 23 Dec, 2010, From http://www.chinadaily.com.cn/business/2010-12/23/content_11743225.htm [10] EU TECHNOLOGY TRANSFER TO CHINA - The automotive industry as a case study [11]Lei Hui, Xu Changsheng. China’s Automobile Industry: From Market Protection to Effective Competition. China Economist, 2006 (11). [12]Peng, M.W. Global Strategy. Thomson South-Western, 2006 [13]XiaoFeng Wen