Government and Business Environment Case Study

Honda in China: Government Regulations and Firm`s Strategy

OR

Abstract:
China’s automobile industry, with its incredible growth seems to be on the verge of creating catalytic shifts in the global automobile industry, which has been dominated by the European and US carmakers since a century. The strong support of the government has made it become the world's second largest and most dynamic auto market. Its cost advantage and high potential domestic market has attracted automajors to set up their manufacturing unit in the country. However, in a bid to accelerate the technology's pace, the government has forced the foreign automakes to share their technology know-how. As a result, Honda – Japan’s first automaker to expand into China – has reshaped its strategies to work towards creating an entirely new ‘Made in China’ brand that will serve its long-term interests in the Chinese car market, and as well conform to the government's regulations.

The case essentially focuses on the government's influence in the business environment by means of regulations and laws that affect the corporate strategies. Also, Honda’s new ‘China’ brand initiative – its prospects and perils is discussed. The intricacies involved in marketing the China brand globally – low-brand image and poor customer perception – are broadly debated. Above all, the dilemma is outlined – should government interfere in the market or leave it to the dynamic play of the market forces?

Pedagogical Objectives:

This case study has been organised to:
• Analyse the Chinese automobile market
• Examine the role of Chinese government in the success of Chinese automobile industry
• Critically understand the imperativeness behind Honda’s China brand initiative
• Assess the consequences of government interference in corporate strategies in a dynamic business environment like the Chinese automobile market.

Keywords : Honda, China, Automobiles, GM, Collaboration, Success Factors, Volkswagen, Operations, Fragment, Subsidy