ECO402 GDB Solution Spring 2012

Question:

Japan had remained world’s largest producer of automobiles for quite a long time but devastating earthquake and tsunami in recent years adversely hit Japanese economy. Now China has overtaken Japan’s automobiles industry and had become world’s leading manufacturer of automobiles. Many Japanese automobile manufacturers including Toyota, Honda and Nissan have shifted their manufacturing plants in China instead of choosing any other country.  Keeping in view the above stated situation, discuss the economic factors that Japanese automobile producers have considered while taking decision to establish their manufacturing plants in China.Also elaborate how this decision would give benefit to the consumers of the world?

Solution:

Japan would also feel a need to shift their manufacturing plants in a country that is already got a handsome skill in the matter due to which it is ruling the country. Factors that would affect could be:

Labor, it is easy to hire staff in a country which has wide scope of the field which further helps employment issues that will hugely benefit the people seeking jobs and a chance to learn and cheap staff will benefit regarding companies.

Raw material cost, will be cheap in an industrial country as china, which has few natural resources but primary industry preparing raw material are in good numbers.

Asian Market is fitting to loads of producing concerns as it’s the leading market, thickly populated and very promising. And cheap water channel provides easy mode of transportation.

People inAsiahave so much variation that demands variety of products according to needs and also in great number so it’s completely beneficial on both sides.

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