Report on Tesla's Investment in the Chinese Market

This report analyzes Tesla's strategic investment in the Chinese market, examining the company's decision to establish a factory in Shanghai. It explores the motivations behind this move, including the large and growing Chinese consumer market and the potential for increased revenue. The report also discusses the Chinese government's decision to allow Tesla direct entry, highlighting the benefits for both parties, such as technology transfer and market access. Furthermore, the report investigates the potential negative impacts of Tesla's expansion in China on the United States, including the risk of trade disputes and the imposition of tariffs. The report concludes with a review of the sources used for the analysis, providing a comprehensive overview of Tesla's investment strategy in China and its implications.

Running head: MANAGEMENT
International Business
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1MANAGEMENT
Table of Contents
Question 1: Tesla’s Decision to Invest in China.............................................................................2
Question 2: China’s Decision to Allow Direct Entry of Tesla........................................................2
Question 3: How the Expansion of Tesla in China Hurt USA........................................................2
References:......................................................................................................................................3

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Question 1: Tesla’s Decision to Invest in China
China represented the largest market for new car as increasing number of Chinese
consumers expresses interest in buying them for the first time. Therefore, the automakers of the
world have been speeding up for building plants in China and Tesla being an automaker was no
different. Tesla took a decision of opening a plant in Shanghai and cranking out close to 500,000
vehicles in a year that would be enough in generating considerable revenue (money.cnn.com,
2018). Although, Tesla would have the sole ownership of the factory but it hopes to capture a
better market with necessary approvals from the government.
Question 2: China’s Decision to Allow Direct Entry of Tesla
The automakers entering China need to enter into joint ventures with the Chinese counter
parts thereby sharing their technology and profit. Thus, the decision of China to directly allow
Tesla would benefit it in terms of the technology and profitability. Besides, a mandate from the
government also mentioned that Tesla needed to enter into investment agreement with the local
authorities. It also mentioned that Shanghai would also cooperate with the company on research,
development and technology thereby gaining considerable experience.
Question 3: How the Expansion of Tesla in China Hurt USA
Automakers prefer to build the cars closer to where they would like sell them. Tesla was
no different in this respect. A plant in China would imply in reducing the risk of getting caught
in the futuristic disputes of US-China (usatoday.com, 2018). Further, the expansion of Tesla in
China would hurt USA since it would allow China in imposing 40 percent tariff on the vehicles
imported from United States.

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References:
money.cnn.com. (2018). Retrieved from
https://money.cnn.com/2018/07/10/news/companies/tesla-china-factory/index.html
usatoday.com. (2018). Retrieved from
https://www.usatoday.com/story/money/cars/2018/07/10/tesla-china-factory-tariffs/
770651002/