Why has BMW planned to build its second factory in Shenyang, China?
Introduction
This case study will investigate the car manufacturer BMW and its recent plans to increase production in the Chinese market. BMW is a Transnational Corporation which can be defined as ‘a firm that has the power to coordinate and control operations in more than one country’ (Dicken, 2011, p.110).
The automotive industry for years has been very static, but the automotive power is now shifting. Over the past decade there have been drastic changing patterns of consumption, for example China has experienced rapid changes in their GDP, growing by 10% per annum (World Bank, online). Car production is now shifting to new regions of the world with Japan and…show more content… Having this joint venture also enables BMW to assert greater control over their future expansion in China.
Transportation links of Shenyang enable BMW to export their goods from Leipzig, Germany to Shenyang via a high-speed container train in 23 days (DB Schenker, 2012). So far over 4,700 containers have travelled from Leipzig to Shenyang for BMW (DB Shenker, 2012). Shenyang is also the railway hub for the northeast of China and therefore BMW are able to easily export the vehicles across China for sale.
Implications of BMW’s expansion
There are positive and negative implications of TNC’s such as BMW increasingly expanding production overseas.
Negative Implications
Uneven Development
With an increase in FDI from companies such as BMW in areas such as Shenyang, there is a growing fear that China will see increasing levels of uneven development (Fan, 1995). According to Marx, everyone in all regions within a state should have equal shares of resources and development (Wei, 2000). However this has evidently not happened in China. In 2009 Shenyang had the highest GDP per capita in its region with $12,590 (CSI World Factbook, 2013). However regions such as Guizhou are struggling with unemployment with a GDP per capita of $2541 (CSI World Factbook, 2013). This gap is only going to expand as rapidly developing cities attract the highest skilled workers and
