View attached explanation and answer. Let me know if you have any questions.

1

Global Strategy Paper on Wanxiang

Name
Institution
Instructor
Course
Date

2
Global Strategy Paper on Wanxiang
Wanxiang Group is the largest auto parts maker in China and supplier to the big three
Detroit carmakers: General Motors, Ford, and Chrysler, founded by Lu Guanqiu in 1969; that
acquired karma automotive in 2014, the Electric vehicle (EV) maker in California (Choi, 2017),
whose headquarters are in Hangzhou. Wanxiang company started initially as a farm tool repair
plant under the People's commune of Ningwei, during some most difficult sociopolitical
conditions following the Great leap forward in china's history that led to millions of death of
people from famine.
The government was highly committed to communism. Therefore, the earlier
establishments of the company were slow since private enterprises were essentially forbidden
from operations in marketing and even access to raw material products from established
industries. This exclusion from the central economic plan led to slow market growth to
Wanxiang Company until 1973 when Lu was allowed to sell his tools to the municipal farm tool
company, which saw demand for his devices due to the superior quality according to government
recognition. From that point, Wanxiang Company grew and gained market in Hangzhou and
later the entire province, employing and hiring many people in the village of Ningwei and
manufacturing a wide range of metallic parts.
During economic reforms, Lu realized a market potential and abandoned all his products
lines except universal joints and enhanced product quality to stand out in production. Lu
distinguished himself from state-owned enterprises and gained exclusive management rights by
submitting fixed payments annually to the government of Ningwei village and used the rights to
improve employee performance that helped enhance the company’s productivity significantly.
Through an emphasis on human capital, research, and development and embracing state
influence, Wanxiang Company which had become a private enterprise, continued to grow and
expand.
Wanxiang group began its operations in the USA in 1994 and started expanding its role
as a parts supplier into acquiring distressed companies in the US. Since operating equipment
accounted highly for the overall production in the United States, a large percentage of
Wanxiang's business structure dedication was towards delivering original equipment auto parts
in the global auto parts industry. Through globalization, Wanxiang company export business
continued to grow despite the challenges such as selling products through other licensed trade
houses that sold directly to US customers.
Despite the excitement of these expansions, the company had a long-term predetermined
goal of developing a full-on electric car (Kirby & Wang,2018). Wanxiang America's focus
shifted from auto parts to new energy ventures such as lithium-ion batteries and solar panels.
With new goals came better performance and increased revenues. Wanxiang company then
started developing new energy vehicles in 1999; its board formulated a strategy to develop
critical components such as the battery, motor, and electric control before developing the whole
electric vehicle.
In 2002 Wanxiang company developed a sample electric car, and in 2006 contracted
with the state grid to establish electric service vehicles and electric engineering vehicles. Several
challenges followed after the company developed the sample electric car, such as; the acquisition
of A123 Company which was delayed till 2013 after bankruptcy and court ruling, technology
changes, and weak demand for electric vehicles. This weak demand was driven by several
factors, including gasoline prices, government regulations, infrastructure, incentives, consumer
expectations, some of which were beyond company control. In 2016 Wanxiang Company was

3
approved by china�...