Introduction Mattel is a leading company in the toy industry created in 1945, which owns a number of iconic toys and renowned brands. Mattel differentiate between core and non-core products, manufacturing its core products in-house and outsourcing non-core products. And core products include Barbie, Hot Wheels products, selective Disney and Fisher Price lines, while non-core products tended to be promotional items, or toys with short life cycles. Currently, Mattel wholly owned manufacturing facilities in China, Malaysia, Indonesia, Mexico, and Italy. It also has a subsidiary—VOA, which manages its outsourced production. In the year 1997, Mattel merged its second largest …show more content…
Since the equipment of Bangkok and Shanghai to produce is out of date, so it will be a heavy burden if we still dream that they would continue to produce MB cars as before. So renew the equipment when the new plant (starting production in 1999) to produce HW is a more sensible choice.
3. RMB and the policy of China are stable. The labor is plenty and labor cost is the lowest in Guangzhou, in addition to duty reduction and transportation network. This part will be expanded in the following text.
Currency Fluctuation With the currency crisis raging, Mattel hold its decision to build a new plant in Guangzhou because they thought it was comparatively expensive to build a new plant there. But I think currency impact is not as important as location and political stability. There are some reasons that support this opinion:
1. The crisis could not have lasting impact due to IMF’ effort and developing trend of Asia.
2. The economic forces of purchasing price parity would, over time, bring the real labor costs back towards pre-crisis levels. Inflation within devaluation countries would begin driving real labor costs back up. Exchange rate depreciation bottom out and Asian currencies would begin to slowly rise against the US