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Miguel A. MontoyaThe assembly line in the town of Zinapécuaro was to have an initial investment of US$ 150million. Then it was expected to have an additional US$100 million investment in order tohave a distribution network and service workshops. Thus the total investment would add upto more than US$ 250 million.31Salinas and FAW Group considered that in order to be competitive in the segment of inexpensivecars, they must generate high production volumes. Therefore, they would need asecond phase to bring the plant’s capacity to 200,000 units per year, considering both domesticand export markets. This second phase was to include a body-stamping process.The Automotive Plant had two access paths, one from Mexico-Guadalajara Highway, andthe other from the old road to Zinapécuaro, Michoacán, which connected to the port andthus allowed for an easy export.On April 7 th , 2008, as part of the plant project, the FAW Group President Wang Gang and thePresident of Salinas Group Motors Javier Sarro signed a commitment letter in order to createa research and development center. The main objective of this center was to link the educationsector with the activities of the vehicle assembly plant. At this event the Minister forEconomic Development, Eloy Vargas, announced that universities were presented with themodel of placement of students with the productive sector. This program sought to link careersto the needs for the Center for Automotive Technological Innovation and Developmentto produce cars in Mexico designed by Mexicans with Chinese technologies. Vargas said thegraduating skilled labor from Universities will contribute to the development of Michoacán 5 .The Ministry for Economic Development of Michoacán explained that both companies intendedto set up R&D laboratories in Mexico. The main objective was the designing of vehiclesand bodies for markets in Mexico and Latin America (Panama, Guatemala, Honduras, ElSalvador, Brazil, Peru and Argentina). Likewise, the estimated investment for the constructionof this center of research and development was US$ 12 million. Among the benefits forMichoacán from the investment, the government of Michoacán found: triggering the industrialdevelopment of the state; anchoring the new industrial zone in the state; increasing morethan 5% of the economically active population; creating a center of research and developmentof world class body design; and being China’s largest investment state receptor in thecountry.This strategic project was crucial in the industrial development of Michoacán, promotingthe opportunity to move into the automotive sector. This was one of the segments of theheavy and technology industries that was most likely to generate economic income and jobs,attracting investment through plants that generate and require the products and servicesof local companies. All of these characteristics facilitated an increase in job creation and inthe generation of new poles of development. All these concepts and the need for nationalcomponents for automobile assembly opened the door for the consolidation of the automotivecluster. Additionally, they also triggered the creation of a research and developmentcenter, which would help attract companies that are specialized in the field. This promotedthe consolidation and positioning of the State of Michoacán as the best option in the sectorgiven its geographical location, logistics and technology. In the same way, all the abovewould contribute to developing local talent through linkage programs with 12 universities in5. Estrada (2008).GCG GEORGETOWN UNIVERSITY - UNIVERSIA ENERO-ABRIL 2012 VOL. 6 NUM. 1 ISSN: 1988-7116pp: 23-35
International Joint Ventures among Developing Country Multinationals: The Case of Salinas Group-Faw32the state of Michoacán; additionally, a 5% increase in the GDP of Michoacán was expectedas the home of the popular car in Mexico and Latin America.In 2007, officials from the Ministry of Economy authorized the importation of approximately5,000 vehicles from the F1 and F5 models from China, which arrived in the country in October2007. The cars were disembarked in December of that year, at the port of Lázaro CárdenasLas Truchas, Michoacán in Mexico’s Pacific coast. These remained on board until theygot a permit to be released, and were commercialized from mid-January in the companystores, mainly in the Federal District and the central states of Mexico and Morelos. Theywere also sold in the western state of Michoacán and Guerrero, a state from the southeastof Mexico.3.6. External Shock: Economic CrisisThe U.S. economic crisis, the international economic recession, unemployment and thecrisis being experienced by the global automotive industry negatively affected the mood ofconsumers in an atmosphere of uncertainty. All these factors made it difficult to invest in thepurchase of a vehicle or other high-cost product.According to The International Organization of Automobile Manufacturers (IOCA) the volumeof world production in 2008 declined 4.1% over the previous year. The Mexican Associationof the Automotive Industry (Asociación Mexicana de la Industria Automotriz, AMIA, 2009)announced that in the first quarter of 2009, 246,878 vehicles were sold, 100,182 fewer thanwere sold in the same period the year before. The AMIA attributed the lack of credits tojob insecurity and to the drastic drop in sales. But to these must be added the general risein prices for cars, as well as the constant increase in gasoline prices, the crushing taxesthat raise prices of vehicles (VAT, ISAN, tenencia which is an annual payment for having avehicle), and payments services such as verification, plates and insurance against theft andaccidents. Consumers, fearful of adversity, stopped buying cars and new vehicle sales inDecember fell nearly 20%, and closed the year with a contraction of 6.8%. Recent analysisfrom Frost & Sullivan “How the Economic Crisis is Affecting the Passenger and Light CommercialVehicle Market in Mexico” revealed that the market sold 1,025,520 units in 2008 andit was estimated to be reduced by approximately 175,500 units in 2009 due to the economiccrisis.In 2007, Mexico’s automobile credit fell one percent, while in 2008 it decreased by 12percent. It is not just financial institutions that are reluctant to provide credit, but also theautomotive and banking institutions who are also putting restrictions on lending money.Mexico’s federal government gave the automobile industry a rescue package to stay afloatin these difficult conditions. For example, the Technical Stoppage Program developed by theMexican government helped about 60 major companies related to the automotive industry,and was designed to help companies through the third payment of salaries to avoid layoffs.GCG GEORGETOWN UNIVERSITY - UNIVERSIA ENERO-ABRIL 2012 VOL. 6 NUM. 1 ISSN: 1988-7116pp: 23-35
Page 2 and 3: CARTA DEL EDITOR IN CHIEFEditor in
Page 5 and 6: StaffDe la Torre, José, Dean, Chap
Page 7 and 8: Staff2. MULTINACIONALES, INVERSIÓN
Page 9 and 10: SELECCIÓN PROCEDURE PROCEDIMENTOIN
Page 11 and 12: Instrucciones para Autores y Proced
Page 14: INDEXACIÓN INDEXING INDEXAÇÃOInd
Page 17 and 18: Economic Relationships between Lati
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Page 35 and 36: 36Japanese Foreign Direct Investmen
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Page 55 and 56: 561. IntroductionClusters and indus
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Entrepreneurial Clusters in China a
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921. Introduction: Mexico and China
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Why isn’t Mexico on China’s Gro
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1081. IntroductionChina and Latin A
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Promote China-Latin American Relati
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1161. A Brief History of Economic r
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Building the New Silk Road across t
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Zhu HongboIn fact, some Latin Ameri
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Zhu Hongbo5. Conclusions135China an
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1. Introduction137China’s emergen
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Edy WongTable One: Compositions of
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Edy WongTable 2: China’s R & D Ex
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Edy Wongon ‘new economic geograph
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Edy WongIn today’s global market,
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Edy Wongdemand-side factors in the
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Edy Wongterms of quality, reliabili
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Edy Wongindustry. Second, value cha
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Edy Wongconsumption of Western luxu
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Edy WongReferences155Child, J.; Rod
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Vol. 6 Num. 1 - GCG: Revista de GlobalizaciÃ³n, Competitividad y ...

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