Ford and Changhan Auto in China

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Ford and Changhan Auto Co.’s joint venture into China made perfect strategic sense. A country which had Johnston et al. (2011, 701) “come out of the sever recession of 2008 and 2009 relatively unhurt” posed quite an attractive offer to businesses around the globe. However, what made it more attractive to car manufacturers was a demand for cars that were perceived to be higher quality than most of its Chinese counterparts. However this venture into the Chinese market had its problems too, and this is what I’ll be looking at in order to evaluate why it didn’t develop as successfully as planned.

In 2001 the join venture was created between Ford and Changhan, and it was proving to be successful as in 2009 it Johnson et al. (2011, 701) “sold 319,000 units for revenue of £360 million.” Many Chinese people saw Western-designed cars as a step above their own country’s manufacturers, due to the apparent increase in quality, technology and aesthetics. The desire for this Western styled manufacturing process was one of many problems which reared its head during this joint venture. Cultural differences meant friction between Chinese and American managers, and Johnson et al. (2011, 702) states “this could jeopardise the achievement of joint venture’s success in the medium term.” The problems with the management in the joint venture cover confrontation between managers over efficiency versus quality, which is made worse through the language barrier and Johnson et all (2011, 702) “Different decision-making processes between the parties.”

There is also the problem of local development, as in China there are Johnson et al. (2011, 704) “many rules that need to be followed before a new vehicle can be introduced….” Customers in China have different preference when it comes to their vehicles, as in its exterior and interior. The engineers at Ford aren’t very supportive of their Chinese colleagues in terms of helping improve the product, so as to make it more suited for the...
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