Foreign direct investments in the Czech automotive industry : a case study of Hyundai Motor Company

Abstract

This thesis is a strategic analysis of the 2006 greenfield investment in the Czech Republic, by the global automotive manufacturer Hyundai Motor Group. We analyse the factors that made Czech Republic an advantageous location for automotive FDIs, and how this influenced Hyundai when they decided to open a production plant in Europe. Through applying relevant theories, our thesis aims to show that Czech Republic is an attractive location for automotive FDIs due to strong industrial traditions of automotive manufacturing, high labour productivity and a cheap workforce, wide range of automotive parts and components suppliers, a favourable geographical location with access to both Western and Eastern European markets and a stable investment climate. Furthermore, investment in the Czech Republic was beneficial to Hyundai in particular, due to the close proximity to sister company Kia’s factory in Slovakia, and access to the European market which at the time were limited by trade barriers between Korea and the EU. In addition, favourable investment incentives from the Czech government were important to Hyundai when deciding to invest in the Czech Republic.