Building Chinese Cars in Mexico: The Grupo Salinas-FAW Alliance

Abstract

Ricardo Salinas Pliego was the CEO of Grupo Salinas, one of the largest business groups in Mexico, and in 2009 he faced a challenge. Two years before, he had negotiated with the Chinese car company FAW to import Chinese cars to Mexico as an initial step towards their manufacturing. However, the global crisis of 2008 made him question the viability of the project and he needed to decide whether to close the operation or continue in the hope of a quick recovery. This was a difficult decision because the group had sold several thousand cars and established a network of car dealers. Closing the operation would mean not only losing the investment in the network while having to continue servicing the cars, but would also result in a blow to the reputation of the group. He was pondering what the best option would be.