Development of Chunlan multinational operation

Essay by Sadrina February 2003

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. Development of Chunlan multinational operation

Chunlan is an international high-tech big company operating on production, research, investment and trade. It has a gross capital of 14 billion RMB and a net capital of 8 billion RMB. It is among the 50 largest enterprises in China. Major products include electric appliance, bicycle, machinery, electronic information, etc. Chunlan has set up ten overseas branches in USA, Japan, France, Singapore, etc., which forms 5 operating zones of Europe, America, Middle East, Southeast Asia and South Asia. Its products cover 84 countries and territories in the world. Chunlan has set up production bases in 9 countries such as Russia, Spain, Iran, Brazil, etc. and has established research institutes in Japan, USA and France. In 2002, Chunlan established a large and efficient global purchase and sales network by use of "matrix management". This indicates that Chunlan is implementing its "global convection" strategy to include capable companies of the world into its purchase and sales network to achieve higher profits.

Chunlan has gone through three stages in multinational operation: (1) product export. In the start of 1990's, Chunlan exported products via agents because its products were not well known in the world. It applied some unique approach known as "difficulty first and easiness later". It aimed at the markets in Europe and America and demanded its products to reach the strict quality standards in those markets. It then expanded to the markets of developing countries. (2) Establish global sales network. Chunlan started to set up overseas sales network in 1997. It established over 1200 overseas outlets via strategic union and developed the initial Chunlan product international sales network and Chunlan research information international network. In 1998, Chunlan set up the second retail network in Europe via purchase, hence possessed its own sales network. Its...