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Not many Chinese companies open manufacturing facilities in the U.S., but automotive glass maker Fuyao is considering just that. Harvard Business School professor Willy Shih examines the factors that go into deciding where companies should locate production facilities. The case, “Fuyao Glass America: Sourcing Decision,” focuses on the world’s second largest automotive glass producer as it expands from China into the U.S. and explores a core question facing managers who want to produce physical products for world markets. To meet a very aggressive cost target, management is faced with two options: fulfilling its contract with its new Ohio factory or its factory based out of Tianjin, China. Unlike the Ohio factory, the Chinese factory produces below the cost target, but it also incurs extensive shipping costs and requires a far greater amount of inventory holding.

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