Management of Supply Network Relationships in an Emerging Market

Abstract

This thesis examines how an MNC in the bus industry operating in China manages its local supply network relationships. Our research is based on exploring Volvo Sunwin Bus Corporation, one of Volvo Bus Corporation joint ventures in China. Institutional reforms and globalisation of production in terms of FDI of MNCs are the primary driving forces behind the recent restructuring and changes of the Chinese bus industry. However, limited technological capacity, overcapacity and low profitability are still main characteristics of this market. Volvo Sunwin’s supply base consists of 280 domestic and foreign companies of which many suppliers are located in Shanghai. In general the company has developed various types of relationships with its suppliers. However great majority is traditional market supply network relationships. It is mainly characterized by low involvements from both sides. In this way the company can handle its suppliers with limited coordinations, adaptations and interactions. In order to gain economic scale, the company needs to consolidate its supply base by reorganizing its supply relationships and sourcing strategies.