Memo

Date: 10/05/2022
To: Professor Marshall
From: Kimberly Eicher
Subject: Case Study: American Factory

Case Study Summary:

Within this case study, American Factory, it was about General Motors (GM) and
how this once thriving company was struggling to keep its doors open. There were
thousands of employees who would have lost their job had it not been for a Chinese
company that swooped in to save the industry and jobs for all employees. This Chinese
company was ran by a Chinese billionaire who hired two thousand blue-collared
American’s along with high-tech Chinese citizens and quickly regained the hope and
optimism from employees who had once been involved in a thriving company. (Bognar,
S. & Reichert, J., 2019)

What are some of your initial thoughts or reactions to the news of the GM plant
closing?

While I watched this documentary, I felt sadness and empathy for these
employees. When a company closes its doors, this has such an impact on each and
every individual who once worked at the company. We have jobs not because we want
to, but because we have to. We have jobs so that we have money to pay for food, a
mortgage, electric bills, car insurance, etc. Many families would have been impacted by
the shutdown of this company, but fortunately it had been saved by the Chinese
company and renamed, Fuyao.

What do you think of the reaction(s) of the former auto workers to once they
learned of the Chinese company’s purchase of the closed auto plant?

As these employees of GM who went through the shut-down scare and re-
opening as a Chinese company, I can assume that there we many emotions and
frustrations. Within the documentary on this company, it went over the transition and
implementation that the Chinese had as they moved to this new country to work. Many
of these Chinese citizens had taken to the American workers and had gone to many
American events and holidays as a way to get cultured and get to know their future
employees.

When the Chinese workers had an orientation, they received an overview of

American culture. What is your view of that preparation for the changes they were
about to face?

I have never been out of the country, but I can imagine moving yourself to a new
country without having ever been there before, and starting a new job, would be a very
nerve-wracking thing to have to deal with. Although these citizens had been “cultured” in
the different ways that Fuyao had planned for their Chinese employees, there is no real
preparation for getting cultured in a new country, without living it yourself and learning
the ways of which American’s work.

Many of these employees within Fuyao had seen frustration and conflict as the
implementation of the Chinese employees took place at the factory. Many American’s
and Chinese workers had started to clash with their differences for many reasons.
Some of these Chinese employees did not speak English and needed a translator at all
times in order to communicate with their peers. The American employees had started to
feel threatened for their jobs once again and wanted to form a union in order to help
strengthen their power as workers. The Chinese working environments compared to the
American working environments tend to differ a lot as well. Chinese are used to working
under hard and tight conditions without receiving much of a break. Americans are used
to receiving time paid off, breaks during the day, medical time for illness, and a nice
clean, safe, and an open environment when working in a factory setting.

What could have helped the Americans and the Chinese with the transition and
acquisition?

This is a hard question for me honestly, because as I stated earlier, in order to

truly learn something, you have to fully immerse yourself into the situation. Although
these Chinese individuals received an overview and orientation of the American culture,
this still doesn’t fully prepare them for the real-world scenarios and people that they
would encounter. In order for this to have had a better impact on both the Chinese and
American citizens, I think there should have been a little bit of time in between the
Chinese moving to America versus starting withing Fuyao as soon as possible. I am
sure they received some type of incentive to move to this country, so this would have
allowed the Chinese to explore their new country and learn the culture that they were
now surrounded by. I also feel that potentially receiving lessons on the English
language would have helped out tremendously. I know communication was a huge
issue in this documentary as the Chinese and American managers and employees tried
to talk to one another and reconcile differences.

Identify at least 5 FDI or International Business terms or theories that were

demonstrated in the documentary and explain how the term or theory played out
in this case. (NOTE: You are only permitted to use 3 identified/discussed in class;
must include 2 new ones)
1. Foreign Direct Investment (FDI) – Direct investment in business operations in a
foreign country. (Hill, 2019)
a. When the Chinese company, Fuyao had purchased the GM factory, this
was an example of FDI since this term means investing in a foreign
country. We saw first-hand examples as to what FDI is and what all this
company had invested within the old factory and employees.
2. Foreign Direct Investor – an entity resident in one economy that has acquired,
either directly or indirectly, at least 10% of the voting power of a corporation, or
equivalent for an unincorporated enterprise, resident in another economy. A
direct investor has a direct investment enterprise operating in a country other
than the economy of residence of the foreign direct investor. (FDI Corporate
Finance Institute, 2021)
a. The Chinese billionaire was the investor in this case. He was the one who
resided in another country, but had complete voting power within the
factory/corporation.
 3. Enterprise – an institutional unit engaged in production. May be a corporation,
non-profit institution, or an unincorporated enterprise. (FDI Corporate Finance
Institute, 2021)
a. This term was an example of the overall factory itself and how production
was engaged with the employees.
4. Absolute Advantage – A country has an absolute advantage in the production of
a product when it is more efficient than any other country at producing it. (Hill,
2019)
a. Within the documentary, Chinese personnel were brought into the newly
opened company to help the American’s learn about the product and
overall production itself. These individuals were at more of an absolute
advantage since they already knew somewhat about the company and
product.
5. International Strategy – Trying to create value by transferring core competencies
to foreign markets where indigenous competitors lack those competencies. (Hill,
2019)
a. This can also be seen by the infiltration of Chinese workers into the once
known to be GM factory. With the Chinese workers here in the new
factory, Fuyao, they helped in transferring their knowledge and capabilities
to the Americans.

Summary:

Within this case study, many cultural and personality differences were discovered
through the implementation of new Chinese employees into this American company.
They struggled with communication and ethical differences along with the proper rights
and wrongs of the company. Americans were used to working one way, when the
Chinese were used to working a different way. Many Americans were used to working in
conditions that were cleaner and healthier along with receiving the proper pay and
benefits that they once had. The Chinese company, Fuyao had many goals for the
future of this company and their employees, but cultural differences and communication
got in the way of making as much progress on these goals. Many of the American and
Chinese management got together to discuss the differences that they were seeing
within their employees. They came up with plans and strategies to implement in order to
make this a better working environment for all. The international business terms that I
found in this documentary were: Foreign Direct Investment, Foreign Direct Investor,
Enterprise, Absolute Advantage, and International Strategy.
 References

Bognar, S. & Reichert, J. (Producers). (2019). American factory [Documentary]. Netflix

film retrieved from https://www.netflix.com

Hill, C.W. L. (2019). Global Business Today. [Yuzu]. Retrieved

from https://reader.yuzu.com/#/books/9781260780598/

Foreign Direct Investment (FDI). Corporate Finance Institute. (2021, January 31).
Retrieved February 9, 2022, from
https://corporatefinanceinstitute.com/resources/knowledge/economics/foreign-
direct-investment-fdi/