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Audi In China Case Study

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3.1. The Study of Audi
3.1.1. About Audi in China
In 1988, Audi entered the Chinese market, confirming a license agreement with FAW (First Auto Works) to produce the Audi 100 model. Compared to the core competitors, for example, BMW created the first joint venture in China in 2003, Audi has the "first-mover advantage" (Prange, 2016: p.41). In 1991, a joint venture named ' FAW - Volkswagen Automotive Company (FAW-VW)’ is established, principally due to the legal requirements of China. Three-decade ago, exports and equity investments shared with some Chinese companies were the only potential method to enter the Chinese market. For setting the joint venture (FAW-VW), Volkswagen had to spend a long time on conducting negotiations with the government then finally became one of its clients (China daily, 2013). Nowadays, FAW-VW is held by FAW (51% of the capital), …show more content…

Compared to the advantages of the joint venture, disadvantages of it can also be significant, particularly when building a relationship with a company whose capabilities and resources do not complement and match (Shah, 2015: p.38). Other aspects that could have a negative impact include the development of the market, lagging technology, the inability of partners to fulfil their responsibilities, and administrative difficulties (Reuber and Fischer,1997: p.816). The management of joint venture is another problem. The administrators of one corporation could be more experienced and decisive with their decision-making than their partners at the other partnership, which could cause conflicts and lack of the cooperation (Hill and Hellriegel, 1994: p.601). Moreover, the poor integration and co-operation could be caused by different cultures and management

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