Lumongsod, Mary Nida S.

CE – 3B
Engineering Management TTh 9:20 – 10:20 AM

1. Why was Volkswagen so successful in China while other companies failed?

Volkswagen was so successful in China because they produced “hot” models with reliable
service assurance. This lets them achieve 50 percent of the market share of China. Their Santana
model, which proved successful in Brazil, was the primary vehicle that suited the Chinese
market. Their strategy in producing these cars is developing suppliers that would have quality
parts for their company and invest in local engineers and managers by sending them to Germany
to study. These strategies enabled them to sell their models at relatively lower prices than their
competitors. These advantages made Volkswagen dominate its competitors, trying to succeed in
China.

2. What would you recommend to Shanghai Volkswagen to remain successful in the

future?

To be successful in the future, I can suggest that teaching the next generation of managers
and engineers in China will help the company remain successful because it will have fewer
expenses than sending their future managers and engineers to Germany. This domestic education
will also help them develop young talents locally and make a breakthrough in making their
engine technology or maybe even producing their car parts that are more suitable to their
standards as Chinese people. With these, the Shanghai Volkswagen will have the luxury to
reduce its price in every model; it will increase the possibility of a higher number of car
purchases. Product quality could help them strengthen their name, and price control will help
them dominate China's car industry in the future.

3. Was it wise of Volkswagen AG in Germany to share its latest engine technology with
the Chinese?

The Germans made a bold but advantageous move when they decided to share their latest
engine technology to the Chinese. Having to share this technology would give them the
possibility of having a Chinese rip-off of their products. Still, their sales would eventually
increase as they slowly dominate the Chinese domestic market of 1.2 billion because of this
decision. In line with their partnership, they improved their engine technology to a different level
without paying more than they did before. They found local suppliers that made their expenses
cheaper, increasing their profit. The Chinese people also got their new jobs, creating a win-win
situation for both parties.