Contents 1. 2. 3. 4. 5. 6. Introduction…………………………………………………………………………………2 Company overview……………………………………………………………………..3 Motorola's Strategy for Strategic Investment in China…………….

4 Motorola : "A Good Corporate Citizen of China”……………………….5 Recent Awards and Recognitions in China………………………………..6 Question and Answer………………………………………………………………….7

The case examines the strategies adopted by the US electronics company, Motorola , in China. It focuses on Motorola's initiatives in the Chinese market to establ ish itself as a major brand. The case provides detailed information on the fourpoint strategy adopted by Motorola in China and the results of the same. The case throws light on the increasing competition in the Chinese mobile handse t market and the reasons for Motorola changing its strategy. The case also deals with the impact of SARS on the market and the future prospects of Motorola in C hina. The case provides detailed information on the Chinese mobile handset marke t. Two major Issues of case is : • The strategies adopted by Motorola to gain popularity with Chinese consu mers. • How far those strategies helped Motorola become a successful company in China.

Company overview Motorola Inc., a global leader in offering integrated communication solutions an d embedded electronic solutions, was founded in 1928. From its humble beginnings making rectifiers and mobile radios, Motorola grew up in the 1940s and 1950s, a nd in the 1960s, it began to develop overseas markets and gradually became a glo bal company. Currently Motorola has over 95,000 employees across the globe, and its business covers wireless communications, semiconductors, automobile electron ics, broadband and Internet access products. Motorola is a technology leader in the fields of mobile phones, pagers, two-way radios and commercial GSM and CDMA systems. In 2002, Motorola had a total sales volume of US$ 27.3 billion. Mr. Chr istopher Galvin is Chairman and Chief Executive Officer of Motorola Inc.

• Promote joint ventures and cooperative projects with local partners to t ake advantage of China's new market opportunities that result from China's incre asing integration into the world market.80 million worth of a nti-SARS equipment. with more than 12.8 billion by Motorola China) • Local sourcing: US$2. The company's strategies are best summarized as below : • Motorola is steadfastly committed to investing in China and transferring technology and building local manufacturing and R & D capabilities in order to provide the country with advanced communications solutions.000(with 1. In addition. broadband and automotive electronics Motorola : "A Good Corporate Citizen of China” In China. • The company will continue its long-term plan to localize management in C hina and to develop and train excellent local management talents. • turing • g main Motorola is now focusing on Creating global centers for excellence in China for the company--manufac and R&D centers Looking for new growth opportunities in the areas aside from our existin business --E911.Motorola in China • Motorola opened a representative office in Beijing in 1987.09 billion (including US$1. Project Hope: Donating RMB 27 million over 9 years setting up more than 60 Proje . • The company will continue to work with local companies to create a compr ehensive local supply chain.7 billion Motorola's Performance in China in 2003 • Total sales: US$4. China. 9 joint ventures and 24 subsidiaries. He re are the highlights: Anti-SARS: In May 2003. Such activities rang from philanth ropy to supporting China's accession into the World Trade Organization (WTO). Motorola's is increasi ng its commitment to supporting local research and development both inside the c ompany and in partnership with research organizations and universities in China. Motorola has dedicated itself to the localization of the c ompany's management ranks.400 for R&D) • R&D centers: 19 Motorola's Strategy for Strategic Investment in China Motorola's growth in China goes hand in hand with China's economic development a nd China's increasing participation in the world economy. Since entering China.4 billion • Sales in China in 2002: US$5. Motorola is devoting essential corporate resources to help develop the capabilities of local suppliers so that they can take part in the company's uncompromising. and set up M otorola (China) Electronics Ltd.29 billion in Internation al procurement and an export of US$2. Motorola donated a total of RMB 11. a holding company. cash and goods.000 employees • Total investment in China by the end of 2002: US$ 3.8 billion • Total employees: 10. in Tianjin in 1992 • Currently Motorola's facilities in China include a wholly-owned company. As part of Motorola's commitment to C hina following the country's ascension to the WTO.67 billion • Total exports: US$4. world-class supply chain. Motorola has been honoring its long-term commitment to China by also b eing a good corporate citizen in the country. the company recently pledged $90 million to set up an R&D company in Beijing.

Motorola wanted to become more Chinese tha n the local Chinese companies. pay respect to Chi nese conditions. Recent Awards and Recognitions in China 1. and G ames for the Handicapped. 2003 Best Service with Innovation in Mobile Telephone Business(CCID) 3. According to company sources. Fortune Magazine's Chinese Edition identified Motorola as China's be st global employer. 2003 awarded by CCTV as part of the television network's Economic Leaders of the Year program. in 2003. In 2002. Motorola was the first corporati on so recognized.ct Hope primary schools and funding 12. The Magazine's Chinese Edition also cited Motorola as the best among global c ompanies in China for • Its long-term commitment • Innovation • Adaptation to the local market. Sports Sponsorship: The 11th Asian Games. Badminton Matches. How far do you think those strategies h elped Motorola become a successful company in china. Disaster Relief: Donated flooded areas along the Yangtze River valley and the No rtheast China region. Environmental Protection: "green China" Program in 1998. joined wit h other local and foreign handset manufacturers in China to sign a pledge to tak e back used phone/battery Active support for China's bid for the 2008 Beijing Olympic Games: Motorola acti vely supported Beijing for its bid t host the 2008 Olympic Games (Motorola's com munication equipment has-been used in seven Olympic Games). 2. Explain the strategies adopted by Motorola to gai n popularity with the Chinese consumers. setting up 11 schools for homeless children in flooded are as. Part I The strategies adopted by Motorola to gain popularity with the Chinese consumers :Motorola has a principle that is “Understand Chinese culture.point strategy in china that is • Investment/Technology Transfer • Management Localization • Local Sourcing • Joint Ventures/Co-operative Projects . the 7th and 8th National Games. the 21st Universiade. does not be self.opinionated. Foreign Investor of the Year. CNBA. 4. Higher Education: Providing RMB 11 million to 12 universities including Peking U niversity and Tsinghua University. do not always blame others” Initially Motorola adopted a four. National Football League Matches.And.000 poverty-stricken children to return t o school.

It also helped them to increase their productivity and quality levels. In addition to its wholly-owned manufacturing plants between 1995 and 2002. the company built its second plant for manufacturing automotive e lectronic. Motorola selected around 20 top employees for a leadership training program and posted them in Motorola manufacturing plants a cross the world. The company also entered into research partnerships with Chinese university and ins titutes.Investment/Technology Transfer Initially. Motorola’s R & D insti tute conducted research in the area of communication. walkie-talkie systems and fabricated silico n wafers. and even assisted them to ent er global market. Motorola provided training to the local suppliers to improve their s tandards by extending technological and managerial support. it had to hire more Chinese employees. Over the years. . Motorola also provided in-house training to its employees. The mission of the University was “to train and develop world-class s taff for Motorola”. Motorola also encouraged its foreign supplier to set up plants in China. Motorola set up a plant at a total cost of $120 million in the Tianji n Economic & Technology Development area for manufacturing pagers. by t he early 2000s. Motorola established the Motorola China Research & Development Institute in Beijing. It also initiated a career management progr am called Cadres 200. This reduced its cost and also complied with government’s requirement that M NCs working in China had to source a certain percentage of components from the l ocal firms. the company started focus ing more on its mobile handset business. In the next phase of its investment of around $400 million. 2002. Motorola invested heavily in the production of semico nductors and mobile handsets. Under this. software and semiconductor s. Motorola entered into nine joint ventures with Chinese firms to expand its presence in the market and also increase its production capacity. Ltd” Though Motorola had a significant investment in the semiconductor business. T he engineering recruits were sent to its manufacturing plants in other countries like US. It also brought GSM technology to china and analys ts credited Motorola with introducing and popularizing this technology in the co untry. Motorola established the Motorol a University in 1993 to train young Chinese people to take up global managerial positions. It also provided GSM technology to the mobile service vendors “ Hubei Mobile Communications and Eastern Communication Co. In 1999. According to reports by. with the worldwide slowdown in the semiconductor business and th e China emerging as the world’s largest mobile market. Motorola also realized that the Chinese managers were not familiar with western management concepts and that th e country lacked managerial talent. By 2001. However. but also localized the management. Motorola sourced components from the local Chinese playe rs. the company had invested around $400 million in Joint ventures in accor dance with the Chinese government policy to boost foreign investment in telecomm unication equipment parts. Management Localization Motorola not only established manufacturing plants in China. Singapore and Hong Kong for on-the-job training in designing and other high-tech manufacturing procedures. Motorola entered into agreement with two Chinese telephone servi ce providers “China Unicom and China Mobile” for installing telecom networks acr oss the country. around 45 Motorola suppliers had set u p manufacturing in China. The company announced that its research center would focus on technological development and innovation. Motorola employed around 650 engineers for its research activities in China. advanced microprocessors. Sourcing Locally To the extent possible. Though the Chinese were good at basics they lacked practical application of theories. In the line of four-point strategy. simple integr ated circuits and cellular phones. Motorola invested in research and developmen t centers in China. The company realized that in order to increase its market share. Thus. The joint ven tures helped Motorola gain access to the Chinese market without establishing add itional manufacturing plants.

Along with its marketing activities. Building an Image Motorola also focused on building its brand among the Chinese. These to wns were based on the Nike Town in the US and aimed at providing a unique retail ing experience to consumers. It installed glow signs in busy market areas and placed advertisements in print and television to increase awareness among consumers about the company. According to Motorola sources. Motorola also sponsored local sports events to enhance brand recall among consumers.000 more engineers and researc hers and add 1 billion USD in R&D to the existing 18 R&D centers. The new strategy can be explained as follows: The ‘2’ refers to building China into a world-wide manufacturing and R&D base. The core of the new strategy is the same as that of the Four-Point Strategy: Win -Win for Motorola and China. Part II • Due to its focused strategy in Chinese market.85% in 2000 to 65% in 2001. accumulated inputs in China to reach $10 billion by 2006 . The company also decided to hire 4. Measures have been taking by all sectors to implement the 2+3+3 strategy. Motorola started feeling the heat by the early 2000s. Motorola undertook a Motorola Hope Tour in which the company’s top executives visited underdeveloped areas in the country to learn a bout the local conditions. Motorola will continue t o be a good Corporate Citizen in China. To strengthen Project Hope. and local purchasing to reach $10 billion in China within the next five years" . It was reported that due to its extensive marketing the Chinese associated Motorola with quality and did not mind paying a premium price for its products. Motorola associated itself with ‘Project Hope’ which was initiated by the China Youth Development Foundation. Motorola announced a new strategy in June 2002. Motoro la has adjusted its worldwide manufacturing capacity and has shifted some produc tion to China. when it saw its market sha re declining due to fierce competition in the Chinese mobile handset market. Motorola conducted exhibitions. According to company sources. it provided financial aid to more than 9.In order to inculcate a competitive sprit among its Chinese suppliers. whe rein models walked down the ramp displaying the new Motorola handsets. Motorola decided to concentrate on the high. The first 3 refers to three new growth areas including semiconductors. In order to obtain visibility for its high-end products.end market. In Motorola Towns mobile handsets were displayed an d consumers could walk in and use various technological gadgets without spending any money. The company also opened up Mo torola exclusive showrooms in the up-market areas such as Shanghai and Beijing o ffering latest mobile handset models. from 1994. Motorola adopted various marketing initia tives. In order to increase its sales and market share. the aim of Motorola Towns was to attra ct the high end consumers With Chinese players competing on price and gaining a foothold in the entry lev el. The second 3 refers to three $10-billion goals: annual production value to rea ch $10 billion by 2006. broadba nd and digital trunking systems. Such as “Teaming for Excellence” which allowed its suppli ers to showcase their talent and components. Motorola also organized programs like’ Green China’ t o protect the environment in the country. The 2+3+3 strategy It is an evolution of the previous Four-Point strategy the company has stuck to for the past 8 years. Motorola also introduced a new retailing concept called Motorola Towns.         . to deeply root itself in China and to be integrated into the China society. Based on the new strategy. By 2002.000 children to complete their school education and constructed around 40 Mot orola Hope Schools in about 25 provinces. Motorola concentrated on building its image as a good corporate citizen in china. Motorola was the leader i n the mobile handset market with a share of 31% in 2000. The company organized lavish launch parties for its mobile handsets. Motorola had 176 direct su ppliers and 700 indirect suppliers and the usage of local components increased f rom 58.

. Hence it shows that the strategies it adopted helped Motorola became a successful company in Ch ina. In order to increase its mar ket share. • By adaptation of four point strategy it was able to gain access to Chine se market. with increasing competition Motorola started experiencing a decline in its market share and by 2002 its share was down to 28%. However. Hence Motorola was bound to change its Recipe and announced a new five-year ‘2+3+3’ strategy in June 200 2. • Because of its strategies Motorola had 176 direct suppliers and 700 indi rect suppliers and the usage of local components increased from 58. Because of its strategies Motorola was able to build its image as a good corporate citizen . It was found that the reason for its losing market share was excessive inventory .8% in 2000 to 65% in 2001. As it established Motorola Universit y in 1993 it was able to train young Chinese people to take up global managerial positions. For the same per iod Motorola’s sales declined by around 58%. the local players had increased share to 20%. But it was limited up to certain period. • Motorola introduced several new concepts like Motorola Towns. It was able to localized the management.• Motorola was successful in China due to its understanding of the market and the people and because of the strategies it adopted. it paid respect to Chinese conditions. it hired more Chinese employees. • It was found that due to its extensive marketing the Chinese associated Motorola with quality and did not mind paying a premium price for its products. Through this it was able to train and develop world-class staff. While Motorola experienced a decline in its market share. In early 2003 Motorola experienced a slowdown in sales in China with the outbrea k of Severe Acute Respiratory Syndrome. desperate competitors and cut throat pricing. Lastly it was suggested that as it was slow down of demand in urban areas mobile companies need to focus more on smaller cities and rural areas. If we examine closely the Share of Chinese Market in Motorola Global Markets the n we can find that in 1999 China’s share in global Motorola revenues was 10% the n in 2000 it increase to 12% and then in 2002 it grew up to 14%. Thr ough the strategies Motorola reduced its cost and also complied with the governm ent’s requirement that MNCs working in China had to source a certain percentage of components from local firms. By 2003 Motorola was r egarded as the most successful as the strategies it adopted helped it to underst and Chinese culture.

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