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Case Chapter 12

Beifang Chuang Ye Vehicle Group is a holding company comprised of 14 transportation companies in northern China, including three taxi companies, a car rental company, and automobile dealerships. The company was formerly government-owned but has been privatized. One of the major issues Beifang faces is a new law requiring passenger vehicles in Beijing to have a new fuel injection system. Though Beifang was aware of the new law a year in advance, it did not prepare adequately. As a result, none of Beifang's vehicles currently meet the new standards and sales have fallen to zero, incurring major losses for the company. Potential solutions include keeping employees on payroll at reduced salaries until compliant

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271 views3 pages

Case Chapter 12

Beifang Chuang Ye Vehicle Group is a holding company comprised of 14 transportation companies in northern China, including three taxi companies, a car rental company, and automobile dealerships. The company was formerly government-owned but has been privatized. One of the major issues Beifang faces is a new law requiring passenger vehicles in Beijing to have a new fuel injection system. Though Beifang was aware of the new law a year in advance, it did not prepare adequately. As a result, none of Beifang's vehicles currently meet the new standards and sales have fallen to zero, incurring major losses for the company. Potential solutions include keeping employees on payroll at reduced salaries until compliant

Uploaded by

rika kartika
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We take content rights seriously. If you suspect this is your content, claim it here.
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CASE CHAPTER 12

“Beifang Chuang Ye Vehicle Group”

GROUP 3 :

1. PUTRI AGUSTINA 2017310031

2. RIKA KARTIKA 2017310195

3. HANA NUR AIDAH 2019340814

SEKOLAH TINGGI ILMU EKONOMI PERBANAS SURABAYA

2019-2020
COMPANY PROFILE :

Beifang Chuang Ye Vehicle Group (Beifang) was a holding company comprised of 14


companies, most of which operated in segments of the transportation market in northern China.
Among the Beifang companies were three taxi companies (operating 3,600 vehicles), a car rental
company, an automobile association (with 160,000 members in northern China), an advertising
company, a vehicle importer, three automobile dealerships, and an automobile repair company.

Beifang was formerly 100% owned by the Chinese central government, but the company was
privatized. By the year 2000, the government owned only 10%. The other 90% was owned by
private investors, the most prominent of which were members of Ming Zhou’s family. The three
automobile dealerships were all 100% privately owned. The largest dealership company, Beijing
Munitions Vehicle Trade Head Company (Beijing Munitions), sold and serviced four brands of
vehicles, all of which were manufactured in China: Volkswagen, Citroën, Jeep, and Jin Bei

The other two automobile dealership companies sold new cars only.2 North Zhi Xing Car Trade
Head Company, with 20 employees, sold imported cars (particularly Volkswagens and Audis) at
one Beijing location. All of the dealership companies were organized by function. Beijing
Munitions had a general manager and managers of sales, accessories, service, parts, marketing,
and administration. The other two companies had fewer departments because they were just sales
companies.

BEIFANG CHUANG YE VEHICLE GROUP IN COMPANY :

The major issue in the case is the new law enforcement that requires all passenger vehicles sold
within the Beijing city boundaries to be equipped with a new fuel injection system. This
announcement has hurt most companies including Beifang since they did not react to it fast even
though they had aware about the implementation of the new law about a year ago. As the
company is affected by the loss, the management has to decide whether they are compensating
the employees or to just share the loss. The government enforces new law on vehicle emission
control standard. The company aware of the new law but did not expect that the government will
enforce the law strictly.
Some problems faced by the company are :

The government would not register vehicles whichh are not meeting the new requirement. As a
result of the enactment, Beifang got no cars to sell since all of them are satisfying the standards
for at least until March. Sales had fallen to zero and the dealership companies are losing money.
Beifang will not be able to achieve its target. The losses that the company is incurring are
covered from the partners’ personal funds. The government enforces new law on vehicle
emission control standard

SOLUTION :

Keep the employees on the payroll, prepare the revise plan and reward them if plan the revised
plan is achieved. Maintain the payroll but at lower salary rate, perhaps even down to the
government-mandated salary of approximately 500 yuan per month. Lay off all or some of the
employees until cars were available to be sold. The company aware of the new law but did not
expect that the government will enforce the law strictly.

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