Sanghai Volkswagen

Question No 1: Why was Volkswagen so successful in China while other companies failed? Answer: Shanghai Volkswagen is a joint venture between the German Volkswagen AG and a consortium of Chinese partners. The 25 year agreement signed by the partners in the middle of 1980s provided for 50% Volkswagen AG equity in the venture. By 2001, this co-operation was the most successful automobile venture in China.

There are some special reasons why Volkswagen AG an Automobile company, so successful in China comparing other companies. Volkswagen was able to build up their market by taking some effective policies. By 2001, it had achieved a market share of over 50% as a result of introducing hot models and assuring reliable service. By developing supplier quantity component and training the Work Force efficiently was another big reason of their success. Attempts by the U.S.

AMC Jeep Corporation and other car makers failed. While other companies were attracted by the potential swift, huge returns because of the large Chinese population of 1.2 billion people (certainly only a very small percentage would be customers), Volkswagen built the venture gradually over the years by sharing their technology with the Chinese. The most important fact is their low rate prices of cars. They were able to keep their product’s price lower comparing other automobile companies.

This idea of lowering the rates of products and services took their company on step ahead towards success and glory. They also maintained a good relation with the host countries Govt. which helped them to promote their company over the country. Building good relationship with both supplier and with the community they became very much trustworthy among the companies. So, these were the key policies of Volkswagen AG’s success story. By 2001, this co-operation was the most successful automobile venture in China while other companies failed to maintain these policies. Question No 2 : What would you recommend to Shanghai Volkswagen to remain successful in the future? Answer: 1. Developed suppliers for quality components 2. Train work force 3. Work under constraints imposed by the host govt. 4. Share latest engine technology 5. The combination of hot models and reliable service 6. Increasing community 7. To keep the lower price than its competitors could 8. Multiple models for export use 9. Pioneer cost effective alternate fuel use 10. Should be leader in the people’s car For silite by Zihad

Question No 3 : Was it wise of Volkswagen AG in Germany to share its latest engine technology with the Chinese? Answer: The idea of sharing VW’s latest engine technology with the Chinese was absolutely wise. The reasons why it was wise are described below- Development costs were also extremely high then, so it is not uncommon for companies in the auto industry to share development costs and develop various items together. That’s what Volkswagen AG did with the Chinese. Back in the late seventies and early eighties, Volvo, Peugeot, and Renault developed a v6 engine together; though the engine at first was a terrible motor, (cam problems, oil leaks)

Renault continued development on the motor and made fairly reliable near the end of its run. In licensing the engine technology with the Chinese, they were also sharing the costs of development the products.

By which VW was able to increase profit and continue their hold on the Chinese domestic market. Volkswagen AG has been in China for a long time; if they didn't provide the Chinese with assistance, then they would loose their foothold in China, which will someday be the largest market for new cars in the world. In providing the Chinese with the latest technology, they are also improving the quality of the air, by reducing the pollutants that they emit. If Volkswagen AG didn't provide the technology, then the Chinese would get it from someone who would.

The Chinese have been up front about wanting to become a global power and they will take assistance from anyone. In a joint venture VW and the Chinese improved the Engine Technology to a higher level and can facilitate all their problems together. By providing the Chinese with greater assistance and greater technology in a fair price they could create a large market. Though there were some bad assumptions on sharing their secret technology with the Chinese but VW became the most successful automobile company in automobile industries by the year 2001.