EXECUTION
The Bosch should now develop the strategy while selecting a development site for the new low-cost ABS platform, which is based on the maximum benefit from the following five categories;
- Input Orientation
- Output Orientation
- External Environment
- Efficiency Orientation
- Political Environment
The above factors for both sites i.e. Suzhou and Yokohama have been analyzed below;
Input Orientation
Suzhou CC unit has 178 employees with about 72 engineers in the development center chiefly dedicated to local customer development and application projects. Out of these 72 engineers, 9 were expatriates. The net R&D costs of CC division in China are 6 percent of sales. The average cost of an engineer in China in 2008 was 40 percent of the average cost of an engineer in Japan.
In Yokohama Japan CC unit, there are 300 engineers working on R&D activities. Almost one-third of the engineering team is experienced as it was involved in projects for Japanese OEMs outside of the domestic Japanese market. The net R&D costs of CC division in Japan are 6.5 percent of sales.
Output Orientation
There were 8.88 million vehicles sold on the automotive market in China in 2007, representing an increase of 21.8 percent. Bosch is mainly targeting the mid to premium segment of the market with high-quality product. From the output orientation perspective only, the Chinese site is more favorable as it is more near to the targeted customers and they know the proper customer requirements.
External Environment
China has a huge market potential for electronic break systems. Therefore, all established suppliers are present in the country. However, the degree of localization is different. Some suppliers just localized part of the production process, some had set-up engineering centers and others are captive suppliers with the original OEMs. The Bosch can also tap the Chinese market with partial localization.
There is a threat that the know-how could be leaked in the Chinese market because the turnover rate of the CC China team and there is a risk that the know-how of other companies could have been slightly higher. However, the company made a try to solve this problem by giving access rights to selective engineers. But this solution created another problem as it created an obstacle to quickly ramp-up the engineering know-how in China.
Almost all international OEMs were presented on the market through joint ventures and some of them through more than one joint venture. However, Bosch wanted to expand operation of their directly managed facility and do not want to involve any local Chinese business man in their expansion initiative.
Efficiency Orientation
High level of efficiencies is prevailing at the Japanese CC plant. The product knowledge there is deep and the long years of working with demanding Japanese customers had brought the center to a level of excellence. CC activities focused not only on passenger cars but also on the motorcycle business. The projects developed in Japan were characterized by very high technical and quality standards. R&D center in China is completely independent when developing and executing local customer projects.
Political Environment
The Chinese government creates some problems when a foreign business is entering the Chinese market while Japan does not have any such problems and plants can be easily established in any Japanese city. But in recent years Chinese government has also started allowing the foreign businesses to operate in China..............................
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