MARKET EXPANSION OPPORTUNITIES AND CHALLENGES OF CHINESE AUTOMOTIVE COMPONENTS COMPANIES : A CASE STUDY OF PT LUZHOU DEVELOPING INDONESIA AUTO COMPONENTS

Abstract

The investments and market expansions into foreign countries have been some of the major strategies for growth by multinational companies. This paper looks into the investment and market expansion strategies of Chinese automotive components companies into Indonesia, with a case study on PT Luzhou Developing Indonesia Auto Components. It looks into factors such as political, economic, social, technological, environmental, and legal with the use of the PESTEL framework. The data were obtained through literature reviews and direct observation at PT Luzhou. The findings show different problems of Chinese automotive companies, including high production costs, dependence on a small customer base, increasing pressure from established Japanese automakers, and the transition of Indonesia toward electric vehicles. Significant barriers also exist with regard to cultural difference, local content, and environmental regulation. On the other hand, it shows adequate opportunities for growth, driven by Indonesia's economic development and increasing demand in the automotive sector. These findings underpin the need for realignment of strategies of companies from China, creation of innovation, and adherence to local regulations. This way, they will be able to take advantage of market opportunities and reduce operational risks. Critical inputs from research would help PT Luzhou and similar firms plot a course through Indonesia's regulatory and competitive landscape for the nurturing of sustainable growth in the fast-changing automotive market.