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TRANSCRIPT
Thinking Points
Yue Yuen Industrial (Holdings) Limited (B): Site Selection
Submitted by Michael Owens and Bram Sugarman_____________
1. “Site Selection for new production lines was key in determining the future of the company’s core manufacturing
business” The case asks the question of whether or not to locate close to existing factories or be one of the first to enter
into Western China.
What are some of the benefits of building new facilities close to existing factories or adding capacity to existing
facilities? Risks?
Is there a first mover advantage to moving west into inner China?
Do they have to consult with the brands they supply; Nike, Adidas etc. before they make a decision? What would
be the concerns of the brands?
2. Yue Yuen listed 14 decision criteria for the location of their new production base. Aside from Labour cost, what do
you see as the most important to their location strategy? Why?
Is there additional criteria that should be taken into consideration?
3. Yue Yuen narrowed their location choices to 4 options; PRD – China, Vietnam, Indonesia, Western China.
Do you think these are the best four options for the location of their new production base? Would you add another
area/country?
3. In each of the regions identified, what is the predominant economic class? How will this change if Yue Yuen decides
to locate in the region?
PRD – China
Do you think the problems being encountered in PRD are reversible to make it a suitable destination for a new
production base?
Is there something that can be done to fix the human capital problem? What would you suggest?
Do you see increasing wages a problem or part of the solution?
Vietnam
Does the increases in political and economic stability offset the fact that the domestic market is poor?
With Vietnam being attractive to firms such as Nike, do you see it experiencing the same problems faced by PRD
in the relatively short term is its popularity continues and more firms flood the area?
Will the lack of a sufficient infrastructure for distribution be a deal breaker or is it a fixable problem?
Indonesia
How big of a factor is the political instability and security concerns? Can they be overcome?
Thinking back to the case on North Carolina, what are you thoughts on the Indonesian government’s incentives?
There is a large labour force but it is unskilled. What would it take to increase skills of current residents and
would you have to bring in skilled labour from other areas/counties?
Western China
Does the lack of infrastructure and the apparent cultural resistence to foreign investment kill any chance of
success in Western China?
Is it best to be the first in and secure resources and build relationships or to have another firms pave the way
and come in at a later date?