Examine the characteristics, advantages, and disadvantages of any two entry mode strategies (other than joint ventures). If you were the CEO of a foreign company wishing to exploit the opportunities in the Chines automotive market which entry strategy would you choose? Evaluate your options and explain your choice.

Answer)     is entry mode strategy in China and only 6% of the total sales of a car are currently accounted for by imports. In general, the Chinese government wishes to encourage local content as well as disapproving imports. Following are the advantages and disadvantages of exporting finished vehicles:

Advantages of Entry into the Chinese Automobile Industry

There is less risk associated with this as it involves a little commitment of resources.

Entry in this strategy could be gradual because the market is domestic and tested and the names of the brand have established.

Disadvantages of Entry into the Chinese Automobile Industry

This entry mode strategy does not fit in with the intention of the Chinese government of building a competitive industry for the automobile.

This entry mode may create a lot of competition from domestic producers, including manufacturing of foreign companies in China.

The asset-light strategy equivalent to licensing is another entry mode strategy that would mean that the design of the product would be provided by the global partner together along with its brand name. Following are some advantage and disadvantages of this strategy:

Advantages of Entry into the Chinese Automobile Industry

This entry mode allows the entrants to enjoy full advantage of the Chinese manufacturing’ low costs and the component supply’s steady build-up.

This entry mode allows capital of the company to be saved by its global partner while concentrating on areas in which the most decisive advantage is secured by foreign entrant has such as design and marketing, research and development.

Disadvantages of Entry into the Chinese Automobile Industry

This strategy can make foreign brands suffer a reputation loss if quality controls are not good.

A risk of establishing potential competitors is there that eventually cause a loss of control of value-adding activities

There sharing of profits can suffer from disputes.

If I was the CEO of a foreign company wishing to exploit the opportunities in the Chines automotive market then I would have chosen the joint venture strategy because this strategy seems to be most attractive among others as I would have been the global company then the asset-light strategy would be entirely in the favor of other company. I believe that the joint venture is a best available strategy as the profits, losses, and costs would be shared equally along with the production burden.