1.

What was the strategic rationale underlying JCB’s entry

into India in 1979 and China in 2005? Given that capital to
fund expansion is limited, does it make more sense for JCB
to expand its presence in these markets, as opposed to
more developed markets, such as those of Western
Europe?

JCB has a long history in India, having entered into the market
in 1979 through a joint venture, before becoming the sole
owner of JCB India Limited in 2003. It is the fastest growing
company in the Indian earthmoving and construction equipment
industry; with one in every two pieces of construction
equipment sold in India one of its products.

These produce complete machines for the domestic market as

well as components for export. The operation is positioned as a
regional hub to supply the rest of the South- East Asia market
and the Middle-East. Although the company runs its Indian
business to the same high standards as the rest of its global
operation, it has drawn on its long experience of the market to
tailor its products to the needs of its Indian customers. JCB
India’s design centre works to ensure that their machines are
fully tailored to the Indian environment and working conditions.

The company attributes its success in India to taking a long

term view and building a strong reputation for high standards of
product quality and customer service. It has also invested
heavily in its people, allowing them to localize the entire
operation from shop floor to senior management. This gives
them a key advantage in terms of having people on the ground
that have a real understanding of the Indian market, as well as
stronger links into the local supply chain. These are lessons it
has taken to heart when expanding elsewhere abroad, including
more recently when it opened its first Chinese factory in
Pudong, Shanghai. JCB’s overseas operations have allowed it to
develop a global presence, with a foothold in key emerging
markets.

JCB entered the market in India and China at the absolute right
timing. At decade of time there is a enormous competition and
it would be difficult for JCB to rule the construction market in
the major Asian countries. In Western Europe JCB could have
invested really big but the best machineries appear from
Western countries such as; United Kingdom, Germany and Italy
and to become internationally known they entered the
international market at the right timing and raised the Joint
Venture in India towards a great success.

In Western Europe would be a big competition and in Asian

countries there was a lack of technology.

2. Why do you think JCB chose to enter India via a joint

venture, as opposed to some other entry mode?

Historically these investments have primarily been through Joint

Ventures. More recently though, as ownership restrictions have
started to be lifted. In 2006 over half of all FDI projects in China
were some form of Joint Ventures.

This is because for businesses seeking to do business in China

or India the decision as to pursue the JV. Joint Ventures can be a
useful route into markets where they lack the necessary
expertise or local contacts, but also bring with them the burden
on managing the relationship with the local partner. As a result,
more experienced firms generally prefer the greater freedom
offered by investing through a Wholly owned subsidiary. In
1979 the government of India declared if a Foreign Company
wants to enter the Indian Market they have to get a Joint
Venture done with a local Company.