Fuyao Glass: Global Strategy for U.S. Country Risk

The chairman of Fuyao Glass Industry Group Co. Ltd. was pleased with his company’s financial results for the first half of 2018. Two years earlier, the organization’s subsidiary, Fuyao Glass America Inc., had completed the construction of the largest auto glass manufacturing facility in the world, which was located in Moraine, Ohio. Its revenues in the first half of 2018 had surged 27 per cent compared with the previous year, while groupwide revenues of the organization had grown 16 per cent. Fuyao Glass America Inc. had converted its loss of ¥65 million into a profit of ¥48 million. With deteriorating relations between the governments of China and the United States (U.S.) indicating an uncertain future, some social pundits were criticizing the organization for deserting China by investing overseas. The chairman remained defiant and confident in his strategy, but how would the company’s U.S. expansion and global strategy be affected by recent developments in the relationship between China and the United States?

This case is suitable for undergraduate- or graduate-level supply chain management courses. The case is also suitable for an executive-level global business course that covers aspects of logistics, supply chain management, and modes of entry into foreign markets. Students should have a background in comparative cost analysis. This case can be used in courses that cover elements of global supply chain management or global sourcing. This case can be used to discuss topics such as evaluating alternative sourcing or outsourcing strategies using quantitative models or methods, such as total cost of ownership and inventory turnover. It takes the view of the supplier and illustrates the importance of costing, but it places the supply chain management decision in the context of qualitative supply, product innovation, trade, and tax risk factors in the evaluation of global supply chain development.<br><br>By working through the case and assignment questions, students will have the opportunity to do the following:<ul><li>Understand global supply chain management in the auto glass industry, as shaped by regional trade pacts, changing tariff structures, and other barriers related to the auto parts industry.</li><li>Analyze the cost and risk trade-offs involved in a decision to shift sourcing from a local to a foreign location.</li><li>Review the pros and cons of foreign direct investment in a world of growing political tensions.</li></ul>

• Supply chain, China, FDI