Motorola in China

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When Motorola entered China in the early 1990s, analysts were not very sure about its success due to increasing inflation and the unstable political environment. However, they did feel that China offered a vast market and was an attractive destination for MNCs. According to Motorola sources, China's vast market and low manufacturing costs were the factors that influenced their investment decision. Initially Motorola was wary about setting up manufacturing facilities in China and put up a makeshift plant in Tianjin to manufacture paging devices. However by 2003, Motorola was regarded as the most successful foreign company in China...

With increasing competition and declining market share, Motorola announced a new five-year '2+3+3 strategy,' in June 2002. The new strategy was announced by Tim Chen (Chen) who took over as president of Motorola China in 2002.

This strategy was aimed at strengthening the company's position in China as it had become a strategically important market for Motorola. Analysts reported that while Motorola experienced declining sales in the other markets across the world, in China, its sales were on the rise. According to company sources, China's share in Motorola's global revenues was increasing over the years (Refer Table IV). Commenting on the new strategy Tim said that it was an extension of Motorola's earlier four point strategy and added, "The core of the new strategy is the same as that of the Four-Point Strategy: Win-Win for Motorola and China. Based on the new strategy, Motorola will continue to be a good corporate citizen in China, to deeply root itself in China and to be integrated into the China society...

Motorola experienced a slowdown in sales in China with the outbreak of Severe Acute Respiratory Syndrome (SARS) in early 2003, which disrupted normal life in China for over a month. It was reported that weekly sales of mobile handsets (which constituted a major share of Motorola's revenues in China) in mainland China were down by 40% in the last week of April resulting in drop in revenues for cellular companies...

Exhibit I: A Note on the Chinese Mobile Handset Market

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