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The results, many dirty greenhouse gases like Carbon Dioxide have been emitted into the air. Greenhouse gases are detrimental and contribute to pollution; China is currently facing a pollution problem because of its excessive usage of fossil fuels. The United States, China, and the European Union are the largest contributors of C02, and for a while the United States and Europe had higher emissions rates than China. However, since the early 2000’s, China has emitted more C02 than both regions; China’s CO2 levels hit a maximum of around 9 Billion metric tons in 2017 .
Additionally, as a result of the higher emission rates, the pollution levels in China have increased drastically. As a result of the widespread pollution, many Chinese citizens have gotten ill or died from pollution related causes. Reports indicate that, “China’s air pollution……. Contributed to 1.6 million deaths per year in the country”. The jarring statistics about China’s pollution problem indicates how there is a market opportunity to sell electric vehicles.
The breadth of pollution across China and intensity illustrate how large the market for electric cars is. Efforts by the government are being undertaken to fight pollution by promoting sustainable industries. Manufacturing electric vehicles in China seems ideal because Chinese manufacturers have direct connections with local developers of lithium batteries.
Additionally, Mckinsey and Company found that, “China’s lithium-ion battery-cell players increased their global supply share, reaching about 25 percent in 2016” . However, despite the visible benefits of manufacturing in China, it’s unadvisable to because the Chinese market is limited to specific cities and in those cities, there are many competing brands.
Chinese consumers have access to over 75 various electric vehicle companies. Instead production of electric vehicles should be shifted the Great Britain, where there is a struggling automobile manufacturing industry as a result of the Brexit vote. Prior to the Brexit deadline, the British automobile industry alone contributed, “20.2 billion to the economy”.
However, with Brexit deadline getting closer, the figures for 2018 represent a different situation. The potential impacts of Brexit are already having impacts on operations, and investment. In order to mitigate the impacts that Brexit has on operations, car companies are moving their factories out of the UK. The SMMT found that, “More than half…. with over one in 10 (12.4%) relocating UK operations… headcount”. Additionally, the Independent found that, “Investment in the British car industry fell by 50% in 2018…uncertainty”. These figures holistically seem discouraging; however, they instead indicate there is an opportunity for new market entrants. From a labor perspective, there is an increased supply of workers and limited demand for them. The limited demand for workers, as a result of more firms leaving, will make potential workers compete for limited positions and lower wages.
As a result of lower wages, manufacturing firms will have to incur less expenses. Additionally, the large supply of workers allows firms to attract top talent; the British auto industry has close to one million workers . Additionally, Britain is an attractive place to manufacture vehicles because of the sheer size of exports they have to China. China accounts for roughly 7.5 % of their total vehicle exports. The market for electric vehicles in China is growing, and Mckinsey and Company found that sales in the Chinese market jumped by 68% from 2015 to 2016. Since China still faces a severe pollution problem, the demand for electric vehicles will go up. China is an attractive market because of its growth potential. As a manufacturer, I would develop a high tech electric vehicle that targets wealthy Chinese people.
Mckinsey and Company found that Chinese vehicle consumers like cars that incorporate modern technology and found that, “64 % of consumers are willing to switch brands for better in-car connectivity”. Also, most electric vehicle consumers in China are wealthy citizens that live in urban areas. The electric vehicle that my company would create would be profitable because it addresses three market issues in China. The vehicle would help tackle pollution issues, meet growing demand for high tech vehicles, and increase market options for the wealthy. Despite the high cost of my vehicle, wealthy consumers will buy my vehicle because of the quality and value associated with the vehicle being British made. Britain manufacturers top quality vehicles like Jaguar, Land Rover, and BMW.
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