Sts Manufacturing

Is China a market economy? What role have foreign companies played in China's fast-paced growth since the reform began? How does the Chinese government perceive foreign enterprises operating in China? What has been the history of China's relations with the outside world and how does this influence their behavior toward foreign firms on Chinese soil?

China started to become a market economy after China’s new leader agreed that new technology from the West is required for progressing economically. Even though it was not yet a privatized market economy, it certainly was a good beginning. Foreign companies played a significant role in China’s fast-paced growth. The reforms that grew from opening the doors to outside investors, led to a great increase in the economic growth, raised living standards of the Chinese people, undermined central government control, and encouraged decentralized decision making. The restrictions on produced goods were lifted and with that policy reform companies were allowed to invest wherever they discovered a market opportunity. The Chinese government did not trust the foreign enterprise based on opinions that were engraved into the Chinese people at least two hundred years ago. There were times when they admired foreign investors but other times they rejected every foreign investor. In 1792, the Chinese emperor stated: “We posses all things and have no need for the strange or ingenious manufacturers of foreign barbarians.” China’s history was on one side very impressive but on the other very tragic. China had incredible technological innovations such as gunpowder, printing press, and fertilizer. China’s recent history was characterized by starvation, poverty, civil war, intrusion and invasion by outside forces. All these influence their behavior toward foreign firm on their soil.

2. What is happening the Chinese automobile industry?

The Chinese automobile industry suffered from serious overcapacity in 1997. Thus the Chinese government imposed a stoppage of licensing any automobile manufacturing joint ventures, and a revision of future car projects. Despite that only Peugeot withdrew from the market. The only successful profitable foreign joint venture was that between Volkswagen and Shanghai Automotive Industry Corporation.

3. Why was STS Manufacturing formed?

STS is an equity joint venture between Shanrong Manufacturing of China (40%) and Tellsan Products of the U.S.(60%).STS Manaufacturing was formed because Tellsan was encouraged by Volkswagen to invest in China. Such an investment would support its joint venture with First Auto Works.

4. Describe Mark Hanson's job. How does he get evaluated? What skills should a JV general manager have in order to do his(her) job properly?

Mark Hanson is the general manger in STS. He replaced the first general manager, who had a tense relationship with Wu. Hanson brings two important advantages to his new job. First he has an MBA and he speaks Chinese. Second, prior to this job, he worked with a large automotive supplier, thus he has a repertoire of experiences.

He is being evaluated on performance.

A JV general manger should be able to understand cultural differences, have managerial skills; knowledge of industry, experience preferable in the same industry, and a big plus is if he or she speaks the language.

5. Describe Mr. Wu's job. Who does he report to? What are his likely motivations?

Wu Fan is the JV Deputy General Manager. He reports to the BOD (Board of Directors). I don’t understand this question; ”What are his likely motivations?”. Motivations to work? Motivations for what? Wu Fan puts a great emphasis on building relationships and connections.

6. What are the issues that Mark Hanson must deal with and why have they arisen?

Mark Hanson has to deal with the following issues:

q Quality аThis problem exists because of cultural difference and absence of quality control system below management level. Manufacturing is based on assigning responsibility to