Supply Chain Management Case Study

Guangzhou Honda: Promoting Glocalisation in China

OR

Abstract:
"Guangzhou Honda Automobile Co Ltd (GHAC) one of China's big five automobile makers, took one giant step forward towards glocalisation as it established a wholly owned R&D (research and development) subsidiary in China, with an initial investment of 2 billion renminbi. In its initial days, this JV (joint venture) successfully exported its popular Chinese compact model 'Fit' (which had a high mileage of around 20km / litre) to EU countries under the brand name of 'Jazz'. GHAC was the first Sino-foreign JV to start developing the vehicles locally, instead of the previous practice of assembling foreign brands. This JV had been able to market its products at a much lower price compared to other Sino-foreign JVs as it increased the use of the Chinese-made spare parts from 40% in 1999 to 80% in 2006. Guangzhou and Honda had also established China's first solely export-oriented automobile manufacturing JV in 2005. Though, Sino-foreign JVs were a common phenomenon in Chinese manufacturing industries, very few firms like GHAC had been able to do justice to their set objective of 'Think Global, Act Local'. Thus this initiative taken by these companies created the opportunity for the Chinese automobile industry to gain self sufficiency in R&D.

Pedagogical Objectives:

This case study attempts to achieve the following pedagogical objectives:
• To analyse the automobile sector in China.
• To analyse the position of GHAC in the Chinese automobile market.
• To establish the importance of R&D in the Chinese automobile sector.
• To analyse the future implications of this initiative by GHAC.

Keywords :  Automobile industry in China, Personal mobility vehicles, World Trade Organisation (WTO), Lower tariffs, Joint ventures, Honda Motor Corporation, Accord, Guangzhou Honda Automobile Co Ltd, Guangzhou Automobile group Corporation, Multiutility vehicles, Odyssey, Research base, Glocalisation, R&D (research and development) researches, Market intelligence

Contents:

• The Chinese Auto Industry
• Guangzhou Honda: The Making
• GHAC's foray in R&D: A strategy to move ahead of other Sino foreign JVs