Jerry Yu is an America-Born-Chinese (ABC) with an MBA.

He is running a small family-owned chain of gift

stores in Brooklyn, New York. During the Chinese New Year holidays in 2009, he was spending time in
Liuyang, his mother's hometown, which is known as "the home of firecrackers and fireworks" located in
Hunan Province in China. His relatives invited him to invest in a fireworks factory that was owned by a
village. However, he wanted to assess how attractive the Chinese fireworks industry was before making
any investment decisions. by sparklers, which were the most commonly used type of fireworks. Rockets
and firecrackers were the second most common cause of injuries, accounting for 25 per cent of the
total. A significant number of injuries were also caused by reloadable aerial devices and novelties such
as snakes and glow worms. The CPSC data showed that the majority of the injuries occurred during the
period from June to July, which was the peak time for fireworks use. The data also showed that the
largest age group of individuals injured by fireworks was children under the age of 15. Males were more
likely to be injured than females. The hands, eyes, and head were the body parts most commonly
injured. In conclusion, while fireworks have been an integral part of many cultures and are enjoyed by
millions of people each year, they can also be dangerous if not used properly. Safety should be the top
priority for both manufacturers and consumers when handling and using fireworks.

The firecrackers and fireworks industry in China is dominated by small, family-owned workshops and is
considered a low-tech and labor-intensive industry. The industry was once government-run, but after
the move towards a market economy in 1979, it became privatized and comprised mostly of family-run
units. However, this move has restricted further technological advancements, as there is a lack of
resources allocated to research and development in most fireworks companies. In response, local
governments have initiated programs aimed at upgrading the traditional fireworks industry. Most of the
manufacturing workers are farmers who work in the workshops seasonally. Liuyang, located in Hunan
Province, is the most well-known place for making fireworks in China, but it faces competition from
other regions such as Liling, Pingxiang, Wanzai, and Dongguan. The capital requirement for starting a
fireworks-manufacturing facility is relatively low, but there are strict regulations in place for safety
purposes, both at the federal and local levels. These regulations are aimed at reducing the risk of injury
and damage from fireworks.

In the late 1990s and early 2000s, there were increasing concerns over the environmental pollution and
safety hazards associated with the use of fireworks in China. As a result, many cities imposed restrictions
on the use of firecrackers and fireworks, leading to a decline in domestic demand. However, in 2005, the
city of Beijing lifted a 12-year ban on fireworks, and other cities soon followed suit, leading to an
explosion in the domestic market.

At the same time, competition in the market intensified, with numerous family-run workshops
appearing and competing mainly on price. Many of these small establishments were located in rural,
underdeveloped areas where labor costs were low, and often manufactured fireworks using cheap raw
materials and simplified techniques.

In response, the Liuyang Firecrackers and Fireworks Industry Department, the government agency
responsible for the development of the industry, introduced an offensive strategy to boost sales. This
included promoting Liuyang fireworks, regulating prices for export sales, and using government-to-
government relationships to secure contracts for public fireworks displays.

As a result of these efforts, Liuyang came to control an estimated 60% of the global fireworks market by
2009. With legal restrictions easing and the huge growth in both the domestic and export markets, the
Chinese fireworks industry became a magnet for foreign investment, with Liuyang remaining the center
of the industry.

Jerry has to make a decision on whether to invest in the Liuyang fireworks industry. The industry is
currently dominated by China and exports fireworks to various countries around the world. There are
mixed feelings among the industry managers about the future outlook of the industry, with some being
optimistic and others being pessimistic. The optimistic view is that the industry can grow if the right
moves are made and that the popularity of fireworks will not die easily. On the other hand, the
pessimistic view is that the industry is facing challenges from more stringent safety regulations, a shift
towards environmentally-conscious attitudes, and the rise of new technologies that offer alternative
forms of celebration.

To make his decision, Jerry can use the industry analysis framework he learned in his MBA program. This
framework involves analyzing the industry's market, competition, market trends, and growth
opportunities. He can use this information to assess the potential of the industry and determine if there
are any unexploited opportunities that he can capitalize on.

Based on the information available, it seems that the Liuyang fireworks industry is facing some
challenges, but it also has potential for growth. If Jerry decides to invest, he should consider the best
way to take advantage of the opportunities available in the industry and minimize the risks associated
with it. This could involve finding a niche market, investing in new technologies, or improving the safety
and environmental impact of the products. Ultimately, the decision to invest in the Liuyang fireworks
industry should be based on a thorough analysis of the market and competition, as well as an
assessment of the potential for growth and profitability.