Xing Yun Lucky Automotive Into China

Xing Yun Lucky Automotive Into China

XingYun is an automobile manufacturer based in Australia, looking to further expand its operations in China. This strategy is based on the increased operational efficiencies the company would register within the Chinese market place, including the access to technological advancements, as well as the access to hard working and cost effective labor force, which is also accustomed to international operations and manufacturing. Aside from the actual operations with manufacturing, XingYun's decision to expand globally is also based on the increasing economic status of the Chinese buyers; China, for instance, registers the second largest gross domestic product, after the European Union (Central Intelligence Agency, 2016). This virtually means that the company would not only produce its vehicles in the more cost effective and skilled region, but also that it would sell its automobiles in China, as this becomes a greater consumer market.

Other aspects of the environment to be considered by XingYun Lucky Automotive include:

Support from the local authorities who encourage foreign investors into the local industry; this support could also include financial incentives, such as tax deductions, as well as legal support with establishing the firm, but the managers at XingYun will have to establish relationships with Chinese facilitators or intermediaries who know and understand the economics and politics of the Chinese market place very well, and also the dynamics of international operations

China is still an emergent market, raising as such risk related to exchange rates or inflation rates

The infrastructure in the country is still rather underdeveloped, posing threats to the efficiency of logistics operations

There is still political instability in the country, with laws being tedious, unclear or changing. The country still registers high rates of breaking human rights and the company will have to be careful in its employee treatment

There are language and other cultural barriers in interacting with the Chinese labor force (Fogel, 2010).

The expansion of the business operations into China will depend on a series of operational factors, with multiple effects on the company. For instance, the Chinese company will mostly handle manufacturing, while design, management or marketing will remain in Australia. This trait of international operations means that there will be a need for local management to be provided and this managerial team -- best formed from both Australian and Chinese managers -- will have to complete Chinese manufacturing operations based on the Australian leadership specifications.

Another critical operational factor is represented by logistics, in the meaning that the company will have to transport most of its automobiles to Australia and other high-income countries of the globe. Given the still developing infrastructure of China, the company is expected to face high costs of transport, as well as sometimes incur delays. This virtually means that planning will be of crucial importance in ensuring the transport o the automobiles manufactured in the Chinese facility.