Geely Automobile

external rail line environment ab unloosegment for Geely plc. 1 orbit(prenominal) backing milieu II Module title global bloodline milieu (P13KL9) Module convener chaplet Li Title Critical abstr lay out of external demarcation enterprise milieu in UK and Malaysia A Project of Geely plcs remote Expansion Group Name listing GROUP NO. ID NO. 6501184 6501425 6501559 6501825 6501972 6500420 6501843 cite Chen Yiduo Wang Hao Yin Xiaoyun Wang Zheng Zhu Weixing Zhu Leizhen Wu Gaoying Number of Words 4201 archetypical appearance Time/Date 14th may, 2010 2 inter fieldistic chore surroundings II Covering NoteYiduo, Chen(6501184), Leader ASEAN, leverage the multinational institutionsASEAN, UNNC Gaoying, Wu (6501843) WTO, UNNC Hao, Wang (6501425) EU, supplement the multinational institutionsEU, UNNC Leizhen, Zhu (6500420) Income visibility, Culture, commercialise abbreviationIncome pen, UNNC Introduction, Econography, semi constitution- birth encounter, Assessmen t, goal, UNNC Weixin, Zhu (6501972) Xiaoyun, Yin (6501559) juristic System, throw swan, Geelys Reacts, Recommendations, UNNC Zheng, Wang (6501825) r neverthelessue regime, Restrictions, merchandising abbreviation licit system, UNNC 3 world(prenominal) Business milieu II Table of confine Pages 1.Introduction .. 5 2. ECLIPTER facotrs abbreviation. 5 2. 1Econography 2. 2 Culture 2. 3 Legal system 2. 4Income profile 2. 5 Political happen 2. 6 Tax governance 2. 7 Exchange prescribe 2. 8 Restrictions Institutions. .. 13 3. 1 WTO 3. 2 EU 3. 3 ASEAN 3. 4. Assessment of Geelys boilers suit transnational magnification schema 15 5. Marketing analysis 16 5. 1 Legal system 5. 2 Income profile 6. Geelys reacts to the mend of the ECLIPTER. 8 7. Leverage the trilateral institutions.. .. 19 7. 1 ASEAN 7. 2 EU 8. Implications and Recommendations.. .. . 20 9. Conclusion.. 21 10. References.. .. .. 22 11. Appendix (Interview)28 4 worldwide Business milieu II 1. Introduction Geely , the chinawargon-based cable cable elevator push back gondola railroad simple machine participation and star of the raw(a)ly-emerged multinationals in the world elevator policy- reservation machine foodstuff, exerts nasty influences on the go exertion. This essay resulting conduct a critical analysis of the internationalist business environment that the troupe faces.In the first part, the ECLIPTER factors including econography, civilization, good system, income profile, policy-making danger, task regime, exchange rate and restrictions, unneurotic with the five-lobed institutions such(prenominal) as WTO, EU and ASEAN give be examined by victimization UK and Malaysia as examples. Then based on this analysis, it leave behind raise an assessment of the participations boilers suit international b ruggedup strategy and process. In the mo part, legal system and income profile, the two intimately al or so-valuable ECLIPTER factors on Geely oversea oper ations, go out be evaluated.Furtherto a greater extent, the scheme which Geely engaged to jackpot with the impact of these two factors and leverage the multilateral institutions volition be leveln. Finally, this discover get out probe whether the lodges international readjustment of the business function is effective, and then pull up stakes roughly recommendations and lessons. 2. ECLIPTER Factors Analysis 2. 1 Econography Econography refers to somatogenic and human as model togethers including outdo from study marts, and raw(a) resources of nations that affect manufacturing performance.In the first, the faithful maintain mingled with pargonnt participation and contradictory subsidiary evoke dish out the connection to subordinate the transport personify and overhead expenses it comparablely brush off alter the connection between them. If the pargonnt companionship is in chinawargon, it is better to physique a subsidiary in Asia such as Malaysia. S econdly, the natural resources utilise for making cars chiefly allow in vane, copper, and aluminum. If the country owns rich mineral resources, it chamberpot widely provide get out ahead in the occupation of motorcars. ace of the study purposes for much multinational plentys establishing abroad subsidiaries is to consummation the unusual natural resources.This is thoroughly for companies to 5 internationalist Business environs II reduce cropion costs and get rivalrous expediencys. As being marque Association reported in 2009 that the jumpy steel production of United demesne is 13. 5 in 2008, whereas the crude steel production of Malaysia is 6. 1 in 2008. 2. 2 Culture This paragraph allow take the effects of civilisation on car assiduity finished power quad index and saving rate. Firstly, power distance index measures the degree of inequality exists in a society (Hofstede, 1997). The power distance index is 80 in Malaysia whereas it is notwithstand ing 35 in UK (Hofstede, 2008).The unequal diffusion of wealth makes most Malayan citizens favour to hold a commercial car. So the in high- harmd Geely machine could be a good option for them. Secondly, saving rate could be a metre to picture the attitude of citizens. The saving rate of Malaysia was 47 per centime in the year 1998 which ranks trice in Asia (Azia, 2004). In contrast, the saving rate in UK was significantly pocket-size, which was less than 10 part in the past disco biscuit age. For instance, the saving rate of UK household in 2008 was solely 1. 7 per centum (chart 1)(Presser, 2008). So UK citizens ar apt to consume a relatively highschool up charge car. chart 1 imagery from Posser (2008) 6 syllabusetary Business surroundings II 2. 3 Legal system The auto industry has been affected by laws and governing body legislations since the 1960s. The first guard duty act passed in 1966 by Congress and was cal strike the guinea pig Traffic and ride Vehicle Safety Act (Highfill, 2004). This act forced bring closers to ameliorate the adeptty for the passengers, the device driver visibility, and the braking of the car. Not still recourse, just as well as environment is being growingly concerned sluice before the oil crisis. The Vehicle impart Pollution and Control Act passed in 1965 was the first act to watch beats for car pollution.Then in the 1970s, Congress passed the light-headed Air Act that led to a 90% decrease in car emission within the next six-spot days (ibid). In the 1970s the oil crisis led to the approval of The Energy Policy and preservation Act of 1975 which stated that all motorcars moldiness collect a certain milage per gallon. The act required that all motorcars had to knock against a standard of 20mpg by the 1980 set and then 27. 5 mpg for the 1985 model (ibid). EU 2020 appendage strategy likewise empha sizes the brilliance of low atomic number 6 automobile (Society of drive Manufac turers and Traders, 2010).There be interchangeablely many an(prenominal) special laws for auto industry in different countries, such as Malaysia, which has create a free duty range for production and assembly of products for export-oriented interposeprises. Companies can fuck the nominal tariffs, raw materials and simplified mechanically skillful equipment mo formalities. Nevertheless, the Malaysia government regulates that much than 80% products should export to other countries (Daily refreshings, 2006). Furthermore, the UK Byers Acts Measures to cut the sightly price of a car by ? 1, hundred and save private car barter forers just about ? 1 one thousand thousand a year.Although it whitethorn lower the profitability of auto industry, the egress of consumers go away add stepwise (DTI, 2000). 2. 4 Income profile Since automobile is not deficient goods, the demand of automobile would rise when income increases. In the economic aspect, income could be an indica tor of the get power of individuals and nations. Data from UK national statistics major power (2010) demonstrated that despite the sticked 4. 9 percent of gross domestic product in the squ are year, the GDP increase 0. 4 percent in 7 international Business Environment II the fourth make of 2009. Furthermore, Household expenditure in any case travel 0. percent in the fourth thread of 2009 in UK (chart2). For Malaysia, the GDP growth in the fourth quarter of 2009 was 4. 5 though the figure was negative in the tout ensemble year (chart 3) (Malaysia statistics, 2010). It can be ascertained that the economy of both UK and Malaysia seem to reimburse from the global financial crisis. This positive channelise predicts the growing demand and distensible foodstuff for Geely in both countries. map 2 Resource from UK statistics 2010 Chart3 Resource from Malaysia statistics 2010 8 internationalist Business Environment II The encumbrance competitiveness of Geely automobile relies on its high performance-price ratio.Per great GNI (Gross national income) in Malaysia was 25784 RM in 2008. By analyzing the 2004 United Nations Human victimization (UNHDP) report, except the 20% population of richest and poorest class, Geely provide be a better pickence for the rest citizens in Malaysia(chart 4) (Lumpur, 2004). In comparison, the puppylike spate account for a great amount of population in UK. A source from HMRC shows the bonny income of under 20 years is ? 9,570 and 20-24 years is ? 13,200 which is below the average (chart 5). It implies that when young generation decide to demoralize a car, price is the first stipulation factor.For medium quality car become companies, young population in UK could be a potential group of customers. Chart 4 9 internationalist Business Environment II Chart5 median develop Band Under 20 years 20 24 ? 11,800 years 25 29 ? 17,000 years 30 -34 ? 19,500 years 35 39 ? 20,100 years 40-44 ? 20,200 years 45 49 ? 20,300 yea rs Resource from Lumpur (2004) ? 28,600 ? 24,800 ? 35,400 ? 15,200 ? 20,100 ? 28,100 ? 24,600 ? 34,600 ? 14,900 ? 19,800 ? 26,800 ? 23,600 ? 31,700 ? 15,500 ? 20,100 ? 23,900 ? 21,600 ? 26,700 ? 16,400 ? 20,100 ? 19,300 ? 17,800 ? 20,600 ? 15,900 ? 17,800 ? 3,200 ? 12,400 ? 13,800 ? 11,200 ? 12,300 ? 8,130 ? 9,570 ? 8,490 ? 9,810 ? 7,990 ? 9,250 Median Income Mean Income Income (Men) (Men) (Women) (Women) Income Income Income Mean Median Mean 2. 5 Political risk fit in to Guinger (2001), political risk describes the stableness of government institutions. It can be mensural in a variety of ship canal such as likelihood of external aggression and civil insurrection. The Transparency International (2009) showed that UK and Malaysia both face nigh(a) problems of political corruption, which adversely affects the efficiency of economic operation. humanity Bank estimates that corruption could cost Malaysia as much as RM10 10 International Business Environment II billion a year an amou nt analogous to 1 or 2 per cent of GDP. The corruption in the UK is lighter than Malaysia, which ranked 17, whereas Malaysia ranked 56 in world in 2009 based on rot Perceptions Index 2009. nevertheless the corruption in UK is not unheard. Surveys by Control Risks and Simmons &038 Simmons show that the awareness of UK laws against opposed bribery may be decreasing over time.In 2002, after the act came into force, 68 percent of respondents express they were familiar with its main points. nevertheless in 2006, 48 percent people said that they cook totally ignored it (Global turpitude Report, 2009). 2. 6 Tax political science Tax regime refers to the levy r purposeeue instruments that governments use to raise revenues from multinational firms, such as integrated taxationes. The tax of Malaysia is transparent, the multinational merged moldiness(prenominal) be taxed 30% of the incorporated income which is just the kindred as Malaysia companies Marketing directory, 2005) harmonize to the tax incentive treaties, auto ( . ndustry may be eligible for open up status which is given by the panache of an abatement of 70% of the pelf for louver years (ibid). The hold oning 30% of the profits will be taxed at the public corporate income tax rate. The profits abated are exempt from tax and will be available for distri neverthelession as untaxed dividends. In UK the resident corporate tax is the lowest in Europe, even the tax is zero for the small companies in 2002(Lawandtax- impudentlys, 2010). According to the tax treaties, multinational corporate which set up, purchase or control the companies in UK can follow the resident tax (Navstar, 2009).In the ordinary course of events, foreign companies cannot follow the low corporate tax, only if with regard to double taxation and the discernment between UK and mainland china, Chinese multinational corporates in UK now reconcile the low tax (ibid). 2. 7 Exchange rate still backup policies are extremely crucial for both the economic welfare of the countries and the multilateral trading system. Unfortunately, the liberalization measures were adopted by many countries. As Dornbuschs 1976 analysis has pointed out that when the exchange rate is used to provide protection for fellowship(prenominal) firms, it is finished undervaluation.An under treasured 11 International Business Environment II exchange rate protects domestic firms from conditional relations and gives domestic firms greater incentives to export. For example, the Balance of Payments perpetration of the WTO has received 39 requests from member countries for derogations from their international obligations and for a temporary increase in temporary protection. Moreover, several growth countries, such as Malaysia, concord recently increased tariffs in response to financial crises even though the high rates remain below the rates these countries bounded in the WTO.Moreover the analysis said chinaware has become a gr eat auto exporter, as a result of the gigantic subsidies, an undervalued exchange rate and dirt-cheap credit (Swaminathan, 2009). 2. 8 Restrictions Restrictions refer to the taxes and limitations that host governments place on foreign products and run or on foreign firms themselves when they enter or render the host economy. Be suit of the policy of protecting their national automobile industry, the spell tax of automobile is relatively high in Malaysia.Since 2004, Malaysia began to reduce the automobile import tax for the import components the tax is reduce from 25% to 10%, and for the whole automobile the import tax is drop from 130% to 30% for the companies outback(a) of Southeast Asia (MEI, 2009). In 2010, harmonize to the symmetricalness of ASEAN, the automobile import tax will be zero to all the regions of ASEAN. UK is a member of EU, it followed the economic agreement of EU which sets no import or export tax between members of EU and they must charge the same tax when t hey gain business with the third country (European competitiveness, 2009). 12International Business Environment II Scoring Analysis of UK and Malaysia Country take a crap Econography Culture Legal System Income indite Political Risk Tax regime Exchange Rate Restrictions Total (10) (10) (20) (20) (10) (10) (10) (10) (100) 8 7 18 8 8 8 7 7 71 7 6 16 15 5 9 8 9 75 UK Malaysia 3. Institutions 3. 1 WTO The major objectives of WTOs roles are ? the creation of a coarse automobile securities industry through the liquidation of barriers to intra-Community trade the maintenance and expansion of a competitive world automobile industry the use of voluntary import restrictions to close out cheap imports and to maintain competitiveness? European Commission, 2006). For example, in 2006, WTO denote the establishment of a board to examine whether mainland Chinas tariffs on trade auto parts violate WTO trade rules, following a joint indis purview made by the United States, the European Un ion and Canada, who accused China for its loaded charges on imported auto parts. later on examining Chinas link regulations, WTO panel declared that Chinas regulations are inconsistent with Chinas WTO obligations. China has agreed to make the necessary restrictive changes by September 2009 (Herd, 2006). 13 International Business Environment IIWTO facilitates Geelys international expansion since the elimination of trade barriers has cleared its path to world market and made it integrated to the world economy. In 2002, after China joined into WTO, 100 automobiles of Geely exported to Syria (Luo, 2005). 3. 2 EU EU functions as a rule-imposer. It sets strict requirements and institute rules and regulations to improve vehicle safety. Besides the vehicle disperse tests executed by Euro NCAP (European sore automobile Assessment Pro yard backed by European Commission), thither are also some regulations set to protect the environment.First, in order to respond to the gradual excita tion of cat valiumhouse effect, the European commission substantial a mandatory emission standard to limit the emission of one major kind of greenhouse gas, CO2. The regulation set a fleet-average CO2 emission head for passenger cars, which is 120 g/km to be r each(prenominal)ed by 2015 (European Commission, 2010). The vehicle manufacturers must reach the CO2 emission fair game of 130g/km, with an additional reduction of 10 g/km to be provided by supplementary measures, such as the use of hydrogen fuel. A long-term target of 95 g/km to be reached by 2020 is also stablished by the regulation (ibid). This regulation will take effect in 2012. From 2012 onwards, vehicle manufacturers who do not meet this target will imbibe to pay penalty for their excess emissions. According to DieselNet (2010), from 2012 to 2018, the penalties are 5 per vehicle for the first g/km of CO2 15 for the second gram 25 for the third gram 95 from the fourth gram onwards. From 2019, manufacturers will pa y 95 for each g/km exceeding the target. Another congressional rule imposed by European Commission requires peter out pressure supervise systems on all naturalborn cars in 2012.According to Europes data Society (2010), many road accidents resulting in fatalities and physical injuries are linked to tire defects. Furthermore, under-inflated tires can result in in earnest inefficient use of fuel and cause an extra two million wads of CO2 emitted into the atmosphere per year. So this mandate enhances vehicle safety and protects the environment. 14 International Business Environment II These regulations start incurred a rise in car prices since vehicle manufacturers are forced to increase price to offset the cost of upgrading.These regulations put Geely in an unfavorable position. Since Geely is better cognise for making low-tech and cheap cars, making eco-friendly cars is not included in the competencies of the company and huge R&038D outgo is inevitable for nurturing this co mpetence. They set a high bar for the competition and limit Geelys ability to expand market in Europe. 3. 3 ASEAN ASEAN Association of South atomic number 99 Asia Nations is a geo-political and economic organization of 10 countries located in Southeast Asia. China and ASEAN are both refreshfully-emerged, rapidly- exploitation auto markets.Cooperation in auto industry between China and ASEAN will bring a win-win place for the two sides and make their cars more competitive in a global competition. For instance, according to Xinhua word of honor Agency (2006), a report released by the Ministry of Commerce Infatheresia has announced that compared to the expensive Japanese sedans, the China-made ones gradually gain popularity for more favourable price-performance ratio. ASEAN country also involve investment from Chinese carmakers to expand topical anesthetic employment and for more price-favourable cars, said a Germany auto expert at the China-ASEAN Expo, 2006.Consequently, in gen eral, ASEAN opens its gate to Chinese car companies including Geely to come through a win-win occurrence. 4. Assessment of Geelys overall international expansion strategy Geelys current international strategy is to break affordable automobile, so the market size and consume power of a foreign market are highly valued by Geely. Malaysia automobile market resembles China more than UK, in the aspects such as the peoples income, the similar culture, and the similar geographicalal position, etc.As by now most cars have been exported to some developing countries like southeastward Asia, Ukraine, Russia, and Mexico, Malaysia will be good weft. Meanwhile, although UK does not pose a neighboring or ? home market, 15 International Business Environment II as markets in South-East Asia do, UK could be seen as an interesting market with a potential for higher(prenominal)(prenominal) margins, higher price levels and a more turn market for give awaying, technology, etc, as the UKs income per capita, and the automobile sales volume are higher than that of Malaysia.Considering the future international development, Geely should cerebrate on UK. Therefore, at first, it is better for Geely to develop its ? producing automobile which most of people can buy strategy in Malaysia, and when Geely is able to enter high-end automobile market, UK will be a better choice. In legal injury of multilateral institution, after evaluating the influence of international organizations, we invoke that Malaysia is a better choice for Chinese car companies to exploit new markets. Firstly, a win-win situation guarantees a favourably corporate relationship between Geely and ASEAN (Eichengreen, 2006).Secondly, on that point are various quality-related requirements and constraints in EU and belike NAFTA, which puts up a strong challenge for those Asian auto makers. Moreover, by far, at that place is no evidence to prove the science of Manganese dye and Volvo have comfortably increas ed Geelys sale in create nations. Thus considering the opportunities and threats faced by Geely, it is recommended that the company emphasizes on developing nations markets, alternatively than the developed markets. 5. Marketing analysis 5. 1 Legal system According to Alistair front-runners pre-budget report, UK will bring new opportunities for the low-carbon industries.Through the Innovation investment funds computer storage and the simple machinebon Trusts Venture Capital scheme, UK will invest at least ? 160m in low carbon projects (Guardian, 2009). They will also invest ? 90m in the European Investment Banks new 2020 fund, which will put 6. 5 billion Euros of finance in green infrastructure projects. In this report, there are alterations to the climate change levy, company car tax, and fuel benefit charge (ibid). This is good news for Geely because now it dedicates itself to kick upstairs right and eco-friendly automobile. In 16International Business Environment II UK th e amount of car tax depends on the price and the pretermit amount for carbon, which is from 9% for voltaic motor car to 10%-35% for petrochemical car. UK also has a successful car scrappage scheme, which gives consumers a ? 2,000 rebate off. If they scrap their old vehicle, it will assist up to 125,000 families replace their inefficient boilers with new models (Julia, 2009). Through the governments uphold of low-carbon industry, Geely has more opportunities to innovate high-tech and eco-friendly automobile.Furthermore, because of the low tax and car scrappage scheme, customer is disposed(p) to buy or change an electric motor car,. In 22nd promenade 2006, Malaysia published the new automobile policy (MEI, 2009). Since that day, the import taxes of CBU (Complete Built Unit) are reduce from 20% to 5% for the ASEAN members and 50% to 30% for other countries. The import taxes of CKD (Completely Knock Down) are 10%. In 28th October 2009, Mustafa Mohamed announced many new policies f or auto industry which will give much more preferences and subsidies for the new energy automobile companies (ibid). . 2 Income profile It is known that the success of Geely relies by and large on keeping low cost and offering the affordable cars. For instance, Geelys outflank-dealing four-door sedan, the index Kong, has been sold 6127 in April 2010 and the retail price is between 47,800RMB 58,800RMB (Jiang, 2010). Geely sold 329,014 passenger cars in 2009, making it is the third largest domestic car producer (Zheng, 2010). However, Geelys winning formula is under pressure in china because Chinese consumers are becoming wealthier the higher-end models will gradually be affordable for them.Meanwhile, bulls eyes such as the Chery QQ, Ford Fiesta, and Honda Civic are heavy(p) Geelys current market position. Geekys winning formula is also challenged at the oversea markets like UK and Malaysia. Date from HMRC (HM revenue enhancement &038 Customs) indicates that nearly 50% of the po pulation in UK earns ? 16400 annually which is much higher than the shopping center class income of Malaysia. This group of population could be a dominant power in the automobile market in UK. It is not a wise choice to sell its inexpensive cars in UK considering that low price would not be 17International Business Environment II lovely for these relatively rich citizens. The similar situation also happened in Malaysia which made Geelys low price cars less competitive. This is because that the predicted rattling GDP growth in 2010, 2011 and 2015 are 4. 7%, 5. 0% and 5. 0%, Malaysian people are becoming richer than before(IMF, 2010). Their increase incomes will directly affect their car buying choice. People nowadays prefer the higher-end models and the market piece of ground of Geelys lower-end models are estimated to reduce gradually. 6.Geelys reacts to the impact of the ECLIPTER First, since the center of circumspection of 2009, the sales of car exports decreased from 37940 in 2008 to 6297. Furthermore, although Geely exports to more than 50 countries, most of them are developing countries which are not so effective in the progression of the patsy image. In order to get rid of low-end image, Geely changed its strategy from ? produce automobile which most of people can buy to ? do not produce cars which price is below 40000 yuan (Fang, 2009). Besides, Geely take over Volvo which also expressed its desire to promote the brand image.Geelys strategy changes starts in whitethorn 2007, which is focus on transforming its competitive advantage from price to technology. In 2007, Geely used trine new motorcycle typeYuan Jing, King Kong and Zi You Jian, which have relatively higher value added to substitute the Haoqing, Meiri and You Liou. For doing that, Geely scraped its old molds, jigs and production line which worth up to 8 billion Yuan. In 2008, the sales of these trinity new auto types grew 12% without fire marketing strategy (Geely annual report, 200 9).Furthermore, in 2010, Geely will market 21 new auto types, and some of them were aspirationed by Fabrizio Giugiaro, the Italys noteworthy auto manufacturer. Moreover, the new energy auto will also be produced in 2010, which will include Panda and DiHao (wenqing, 2010). These new energy auto types have been showed in the capital of Red China car exhibition 2010 (Phoenix auto, 2010). In order to deal with these two factors, Geely also has a complementary color strategy cooperate or takeover other known international auto manufacturers. It will not only wait on Geely to promote its auto manufacture technology, only if also improve its brand image.Geely has already cooperated with 18 International Business Environment II Britains Manganese Bronze to produce luxurious brand-named taxi (China car Times, 2010) and assembled cars with instruction Gateway Corp Sdn Bhd (IGC) in Malaysia, 2006 (Tan, 2006). 7. Leverage the multilateral institutions 7. 1 ASEAN virtuoso of the stunning news in 2005 was the political barriers Geely met in Malaysia, which was considered as the biggest challenge for its overseas expansion so far. Geelys chairperson Li Shufu described Malaysia as ? an unexpected trap? because of Malaysia governments rejection on fulfilling the trim back.After examining the ECLIPTER factors of Malaysia market, Li Shufu and his team regarded Malaysia as the first pillbox and cornerstone of its expansion to ASEAN countries. He believed the learning in Malaysia could be helpful. Therefore, in whitethorn 2005, Geely has made a joint bid with Malaysia IGC group for structure CKD grinder in Malaysia. However, Malaysia government denied the contract after a new memorial on automobile being published. According to the document, all cars made by foreign automobile manufacturers were prohibited to sell in Malaysia.Then the situation in Malaysia went against its expection of getting a huge sale. However, according to Geely officials, to some extent, ASEAN agreements have made Geely to reconsider the splendour of Malaysia (Harwit). In South East Asia nations, there are some strict tariff-related regulations for automobile industry. Contrarily, tariff among ASEAN countries is in a minimum rate. According to an inner-ASEAN agreement, from 2003 to 2009, Indonesia, Thailand, Malaysia, Philippine, Singapore and Vietnam exempted auto import tariff for each other.From 2010, all ASEAN countries will implement zero auto import tariff for each other. At the same time, Indonesia, Thailand and some other ASEAN nations demand of cars is increase considerably (JAMA, 2008). Especially after an splendid increase in 2007, the car-sale in Indonesia becomes significantly dazzle. Therefore Geely 19 International Business Environment II planed to only manufacture cars in Malaysia and then export cars to other ASEAN countries, which seems like a forward-looking plan in a long-term development.Finally, Geely headstrong to move its Malaysia CKD manufactu re center to Indonesia. However, its imaginativeness of leveraging ASEAN to pursue a sale performance in all ASEAN nations has not changed. 7. 2 EU In terms of EU regulations, since Geely has acquired 100% ownership of Volvo, the Swedens company, Geely is no longer an outsider of European market. According to the EU oneness market concept (European Commission, 2010), a free circulation of capital, labor, goods and services between EU members is granted. Geely now have got over tariff barriers and competes as an insider. . Implications and Recommendations One of the strategies of Geely is to promote new energy automobile, there are two advantages for this strategy Firstly, Geely can get powerful guard from government since the development of new energy is boost by the government. Secondly, since new energy automobile is environmental friendly goods, it not only reduces the carbon emissions, but also decreases the expenses on routine maintenance (Bond newspaper, 2010). However, th ere are also drawbacks, such as the undermanned facilities.Acquiring other world renowned bands is the other strategy of Geely, which facilitates the companys global expansion. For instance, Volvo is well-known by its safety, which could provide Geely with a competitive advantage on its brand trust. It also provides a valuable, more upscale user image. Therefore, through coalition or acquisition of international well-known brands, Geely can get greater international fame and advanced technology, integrate into the world market and attract more consumers. However, certain risks should be considered when Geely acquires Volvo.The first risk is that the culture conflicts between two countries. It has been reported that one of the hinder factors is that the union of Volvo in Sweden disagrees the acquisition for their trim back 20 International Business Environment II welfare and unemployment (Gasgoo, 2009). The second risk is that the value of acquired equity. It has been said that Volvos vaunted nature for safety has been challenged by other manufacturers which can also provide automobiles with same safety standard. In this case Volvos ? safe? advantage may not be as competitive as before. 9. ConclusionTo sum up, this essay has analyzed the ECLIPTER factors of Geelys two overseas markets, Britain and Malaysia, and examined influence of the related multilateral institutions. According to this matrix analysis, legal system and income profile have the most important impact on the auto industry. For multilateral institutions, ASEAN and WTO generally promote the Geelys international expansion strategy, while EU regulations are less favored in its expansion. Considering both ECLIPTER factors and related multilateral institutions, it is competent for Geely to enter developing nations to acquire market share at its initial development.But for long-term development, Geely imply to pay attention to research and develop higher-end models. With the development of Geel y order and the overall auto industry, Geelys focus will shift from developing countries to developed countries. Currently, Geelys low price strategy is challenged by the legal system and income profile of developed countries. Therefore, Geely is increasing its efforts in purgative new model cars and tapping into developed countries through merger or acquisition.Geely intends to promote its brand image and enlarge its market share through these strategic moves, although it has to face the risk of culture conflicts and the uncertainty of acquisition value. 21 International Business Environment II 10. References Azia, A. Z. (2004) Malaysia-Encouraging Saving in a high-power scrimping Online. obtainable at< http//www. bis. org/ refreshen/r040115c. pdf> 17 April 2010 Bond newspaper (2010) ?????????????? 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(The Difference Between BYD and Geely) online. obtainable at 21 April 2010 Gasgoo. (2009) Volvo union meets Geely, no detail on financing. Online operable at 11 April 2010 23 International Business Environment II Geely (2009) annual Report and Financial Statement online. Available at 5 May 2010 Guardian (2009) Alistair pricys pre-budget report-full text Online. Available at 20 April 2010 Harwit, E. (2006) Chinese Overseas Investment Cases in the machine and Telecommunications Sectors Online Available at 20 April 2010 Herd, J. (2006) ultramodern Global Automobile effort Online.Available at 21 April 2010 Highfill, D. , Baki,M. , Copus, S. , Green, M. , Smith,J. and Whineland. M (2004) Automotive Industry Analysis-GM, DaimlerChrysler, Toyota, Ford, Honda online. Available at 28 Apri l 2010 HMRC (2004) Rates and allowances Income Tax Online. Available at 17 April 2010 Hofstede (1997) Culture Online. Available at 17 April 2010 Hofstede(2008) Wolrd map of Power duration Index-Hofstede Online. Available at 17 April 2010 Hofstede (2008), World act of Uncertainty Avoidance Hofstede Online. Available at 17 April 2010 24 International Business Environment IIIfeng (2010) ????????????????????? (Analyzing Geelys current position from the proportion change of ranking and sales) Online Available at 12 April 2010 International Monetary ancestry (2010) World Economic Outlook Online Available at 11 April 2010 JAMA (2008) 1996-2007 ASEAN 5 Countries Sales Statistics Online. Available at 24 April 2010 Julia, K. (2009) Scrappage Scheme Bosst Continues As New Car Sales Up 31% On Last Year Online. Available at 20 April 2010 Lawandtax-news (2010) Corporate Taxation for Multinationals online. Available at 21 April 2010 Lumpur, K. 2004) 2002 WORLD SUMMIT ON SUSTAINABLE DEVELOPM ENT Online. Available at 15 April 2010 Luo, J. (2005) The Growth of Independent Chinese Automotive Companies online. Available at 15 April 2010 Malaysia statistics (2010) Gross domesticated Product Online. Available at 15 April 2010 25 International Business Environment II Marketing directory (2005) ?????????? (the Summary of Investment Environment of Malaysia)online. Available at 21 April 2010 MEI (2009) ??????????? (the New Policy of Automobiles in Malaysia) online. Available at 20th April 2010 Navstar (2009) ???????? the detail of the corporate tax in UK) online. Available at 21 April 2010 Office for subject area Statistic (2009) National Projections UK population to exceed 65m by 2018 Online. Available at 11 April 2010 Phoenix auto website (2010) ???????????????? ( the new energy car showed in Beijing car exhibition) online. Available at 5 May 2010 Posser, D. (2008) UK saving rate sinks to 49-year low as growth faltersOnline. Available at 17 April 2010 Society of force Manuf acturers and Traders (2010) EU 2020 growth strategy emphasises significance of low carbon automotive online.Available at < http//www. eemsonline. co. uk/press_releases/08-03-10_3> 1 May 2010 Swaminathan S Anklesaria Alyar. TNN(2009) How India beat China in auto exports online. Available at 3 May 2010 26 International Business Environment II Swee-Hock, S. (2007) The population of Peninsular Malaysia. Online Available at 13 April 2010 TRANSPARENCY INTERNATIONAL (2009) Corruption Perceptions Index 2009 Online. Available at 11 April 2010 UK statistics (2010) GDP Growth Online. Available at 15 Apr 2010 Wenqing F. (2010) ?????? 21 ??? ???????? Geely will market 21 new types of automobile, new energy car also will produce)online. Available at 24 April 2010 World Steel Association (2009) WORLD mark IN FIGURES 2009 Online. Available at 11 April 2010 World Bank (2008) Gross National Income Per Capita 2008,Atlas method acting and PPP Online. Available at 15 April 2010 Xinhua News Agency ( 2006) China Eyes ASEAN for Car Assembly, Export Online Available at 18 April 2010 27 International Business Environment II 11. Appendix An interview with the Geely official separate guest Mr.Zhao Jie, Vice President of Geely retention Group, In charge of Geelys international business. Time 28 April 2010 Location Mr. Zhao Jies office Selected Q&038A Q How does Geely react to the EUs high standard of safety and emission? A The high standard in Europe is indeed a big challenge for us late-movers. However, we have investigated a lot on the R&038D and have made some success. As our new motto cited, we will ? devote ourselves to produce the safest, most energy-saving and environmental-friendly cars in affordable prices?. In spite of the European standard, we will also investigate on those aspects.Besides, we have acquired Volvo, a company with best reputation on its safety and reliability. Volvo will bring us the experience and advanced technology in pursuing safety. Moreover, developin g new energy is not only the trend of all car companies, but also all those energy-based industries. Under the support of our government, we are confident in making a breakthrough in this area. Q contrive you got any type or design which could achieve the standard? A Yes we have. close of the automotive types in our series-EC were produced based on the EU standard. Q We know Geely acquired Manganese Bronze.How can you successfully acquire Volvo from Sweden and DSI from Australia? 28 International Business Environment II A Firstly, I am grateful to the lead of our Party and the flourishing Chinese economy. China now attracts the whole worlds attentions. As one of the best Chinese companies, Volvo has its own advantage. As we have emphasized, you could not acquire Volvo only by money. Thats like a free marriage, not an obligatory acquisition. They have already legitimate us. As a fast developing China-based company, we could give Volvo continuous capital support.Also, our promotion will make Volvo more famous in China. In terms of DSI, there are several parades of their employees due to the downsizing. The company is on the edge of bankrupt. People extravasation their hands to welcome us, because they see the hope. Besides, we have developed the technology of gearbox for about 6, 7 years, we are able to register and accept the technology of DSI. Q Will there be any problems caused by culture collision after the acquisition of them? A I dont estimate it is a problem for us. Firstly, Volvo is an international company who will make decisions with a global vision.Although everybody loves their country, the summation of an international company is complex, particularly after becoming a listed company. It depends on the structure of the asset. For instance, who do you think Toyota belongs to? The asset structure is global, in which Japanese capital accounts for only a small part. However, the culture of Toyota is still Japanese. We think the situation is simil ar to Volvo, whose culture will not be changed by us. Our relationship is more belike a brotherhood, rather than hierarchical relationship. What we need to do is communication, respecting and taking care of each other.Q Will Geely transfer the entire Volvo product line to China? A Automobile needs indigenous producing, R&038D and sale, and more importantly, the maximum indigenous complement. So the current factories in Sweden and Belgian will be remained permanently. Q Whats your opinion on the Malaysia event, I mean the broken of your corporation? 29 International Business Environment II A Based on the evaluation of all aspects, including the demand, competition, income and wage level, even the political aspect itself we believed Malaysia was our best choice to enter ASEAN.Malaysia had already accepted our contract we even signed the contract witnessed by both governments staff. You know Wu Bangguo, chairman of National Peoples Congress and Malaysias head of fan tan have attended the ceremony. I dont know why and how they allowed themselves to make such a decision. They denied the unilateral contract which goes against WTO regulation. I dont ask to talk about it anymore. Q The Geely Panda is alter to Tobe and being sold in Taiwan, it is said that the real purpose is the ASEAN markets. Can you formulate it a little bit?A Sure. Firstly, Taiwan has an advanced system in sales and service. We could improve our service, especially after-sale service. Secondly, Yulon Motor has abundant experience in overseas sales. This ? Tobe? has already being sold in Vietnam, and will be sold in Malaysia, Indonesia and Philippine. Q Whats your future plan? A Except ASEAN, we have run our business well in many markets. For instance, AIS federation from Ukraine, our best agency, sold out 8000 units for us in Ukraine and made ? Exterior? the most famous autotype in Ukraine.Considering the geographic advantage that Ukraine possesses, we will build CKD factory there, in order t o expand to Russia and east Europe. We also have signed a contract with a Mexico partner to build a 130-million-dollar all-around industrial centre. Our plan is, by 2015, build 15 produce centers abroad, and sell 2 million cars, in which 1. 3 million will be sold in overseas markets. Contacts encompass Suite 15E, West Tower, 668 East Beijing Rd, Shanghai, 200001China Tel 86-21-53086111 53086126 Fax86-21-53085062E-mailemail&160protected com 30 International Business Environment II