Case study of BMW's expansion into China
Why has BMW planned to build its second factory in Shenyang, China?
Introduction
This case study will investigate the car manufacturer BMW and its recent plans to increase production in the Chinese market. BMW is a Transnational Corporation which can be defined as ‘a firm that has the power to coordinate and control operations in more than one country’ (Dicken, 2011, p.110).
The automotive industry for years has been very static, but the automotive power is now shifting. Over the past decade there have been drastic changing patterns of consumption, for example China has experienced rapid changes in their GDP, growing by 10% per annum (World Bank, online). Car production is now shifting to new regions of the world with Japan and China now being the largest producers (18.8% and 12.8%) (Dicken, 2011).
The Financial Times article looks at how BMW are experiencing even larger sales volumes even during a global financial crisis. The article discusses that BMW are now changing where they concentrate their sales. A 16.3% fall in European car sales has led to firms such as BMW looking to expand into the Asian market (Guardian, online). The article as a result says that BMW has experienced a 33.5% increase in sales in China (FT, online).
This case study will investigate the causes and implications of BMW’s expansion in to China with reference to three key geographical concepts; Space, place and actors.
Why have companies such as BMW increasingly expanded overseas? (Space)
1. Neoliberalism and globalization
TNC’s such as BMW have been able to expand their businesses to a global scale since the neoliberal economic reforms that were implemented in the 1970’s as a result of the failing Keynesian economic approach of centralized regulation (Hubbard et al, 2002).
Neoliberalism (also known as the Washington Consensus) endorses free trade, economic liberalization, deregulation, free markets and privatization (Mudge, 2008). Since the 1970’s, globalization and
Introduction
This case study will investigate the car manufacturer BMW and its recent plans to increase production in the Chinese market. BMW is a Transnational Corporation which can be defined as ‘a firm that has the power to coordinate and control operations in more than one country’ (Dicken, 2011, p.110).
The automotive industry for years has been very static, but the automotive power is now shifting. Over the past decade there have been drastic changing patterns of consumption, for example China has experienced rapid changes in their GDP, growing by 10% per annum (World Bank, online). Car production is now shifting to new regions of the world with Japan and China now being the largest producers (18.8% and 12.8%) (Dicken, 2011).
The Financial Times article looks at how BMW are experiencing even larger sales volumes even during a global financial crisis. The article discusses that BMW are now changing where they concentrate their sales. A 16.3% fall in European car sales has led to firms such as BMW looking to expand into the Asian market (Guardian, online). The article as a result says that BMW has experienced a 33.5% increase in sales in China (FT, online).
This case study will investigate the causes and implications of BMW’s expansion in to China with reference to three key geographical concepts; Space, place and actors.
Why have companies such as BMW increasingly expanded overseas? (Space)
1. Neoliberalism and globalization
TNC’s such as BMW have been able to expand their businesses to a global scale since the neoliberal economic reforms that were implemented in the 1970’s as a result of the failing Keynesian economic approach of centralized regulation (Hubbard et al, 2002).
Neoliberalism (also known as the Washington Consensus) endorses free trade, economic liberalization, deregulation, free markets and privatization (Mudge, 2008). Since the 1970’s, globalization and
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