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Chinese Fireworks Industry Case Study


ChineseFireworks Industry Case Study

Thefireworks and firecrackers industry has a history of over 2,000 yearsin China. Fireworks refer to devices that are designed to produceaudible and visual effects when burnt or exploded. Firecrackers arespecial types of fireworks. These fireworks are used in Chinesecelebrations during weddings, New Year celebrations, funerals andmore Jiang (Jiang, 2011).


Inthe Chinese fireworks industry case study, Mr. Jerry Yu, who speaksChinese, celebrated his New Year in the home of firecrackers andfireworks in China. Mr. Jerry Yu has an MBA and was an American-BornChinese, his hometown being Liuyang, China. He was operating giftstores in New York and during the holiday he was urged by hisrelatives to invest in a village-owned fireworks workshop. During theholiday he was impressed by the fireworks in the festival, and,therefore, he was likely to exploit the new business opportunity. Ifhe decides to invest, he ought to develop an appropriate SWOTanalysis to exploit this new business opportunity. The SWOT analysisthat Jerry Yu can develop should ensure growth of the fireworks’manufacturing company both in the short run, as well as, the longrun. The best SWOT analysis for the company should comprise of thefollowing strengths, weaknesses, opportunities and threats of thefireworks industry in China (Jiang, 2011).


  • Mr. Jerry Yu investment in the village-owned factory would enjoy good brand reputation of fireworks in China. China leads in manufacturing fireworks and firecrackers in the world.

  • The new research and development initiatives in the Chinese fireworks industry would increase innovations in production of fireworks.

  • Mr. Jerry Yu’s village workshop in Luiyang would enjoy the current competitive power that Luiyang has over other places such as Liling. Luiyang-based firms dominate 60 percent of Chinese fireworks production (Jiang, 2011).

  • There are locally available raw materials.

  • The low cost in operations would increase profits

Theweaknesses of the new investment in the firework manufacturingcompany include

  • Inadequate sources of capital for research and development.

  • Increased competition from other places such as Liling and Pingxiang

  • Weak marketing practices in the export market.

  • Production of low quality devices (Jiang, 2011).

Theopportunities include

  • The government initiatives would promote the growth of the village owned factory

  • Hiring the local skilled workers to work in the factory

  • The increased economic development would accelerate the expansion of the factory’s operations.

  • Most customers prefer firework devices made in China to other countries, and this is an opportunity that Jerry Yu would exploit to make profits (Jiang, 2011).

Thethreats or risks include

  • There are price competitions with other firms from Liliang, Pingxian and Wanxai in China.

  • There is no privacy in factory’s operations and thus the innovations made can be illegally copied by other village-owned firms.

  • There are strict safety regulations from the government (Jiang, 2011).


Themost common businesses in the Chinese firework industry include

  • Village-owned workshops

  • Chemical manufacturing firms

  • Electronics and equipments companies

  • Fireworks marketers or retail outlets in foreign countries

  • Government training in schools, as well as, research and development


Theprofitability of the outlined businesses depends on

  • In the family-owned workshops, it is not hard to make profits if the government continues to protect the businesses.

  • The chemical industries producing potassium nitrates and sulfur would hardly profits if there is continuous use of local substances such as charcoal

  • Those factories that manufacture high tech equipments will not make profits if local materials are used to produce fireworks.

  • The marketers of fireworks in the retail outlets, in other countries will make profits if there is improved quality of products (Jiang, 2011).

  • The government somehow gets involved in the fireworks industry, and it is hard for the government to collect large amounts of tax revenue if the village owned workshops are removed out from the industry (Jiang, 2011).


Themost appropriate skills and resources that these businesses ought tohave in order to make profits include

  • Village owned workshops they should adapt the new technological methods in production so as to be competitive in the market.

  • Chemical industries they should form partnerships with the fireworks factories aimed at promoting their chemicals.

  • The equipments companies they should advertise their materials for fireworks factories to purchase them.

  • The government should enhance research and development through training people in school so as to increase the quantity of devices produced and thus increasing tax revenue (Jiang, 2011).


Jiang,R. (2011). ChineseFireworks Industry. London: Ivey Publishing.