China’s extraordinary economic growth over the past two decades has made the country into a world power, allowing it to accumulate nearly $2 trillion in foreign exchange reserves and to elevate hundreds of millions of its citizens into the middle class. This prosperity has also enabled Chinese businesses to invest in companies overseas (China Daily 07/06/09). However, initial attempts by Chinese industrialists to invest abroad have met with mixed success. Beijing Number 1 Machine Tool Plant successfully acquired Waldrich Coburg in October 2005. Three years after the transaction, the acquisition has proven to be a financial and strategic success. Beijing No. 1 stands as an example for other Chinese companies that wish to expand their businesses into the global market and to effectively manage foreign subsidiaries. In this case, therefore, we explore what worked for Beijing No. 1 in the hope that this will provide useful insights into how other Chinese multinational corporations may replicate Beijing No. 1’s success.
Catherine Dreyer, leader of Browning Haverford’s implementation team for a new joint venture in China, faces a complex problem. How can she convince the Chinese GM that he must change his way of doing business to transform a successful domestic company into part of a multinational? Browning Haverford is a British company focused on personal hygiene products entering into a joint venture with Ningbo Prime Dental Care Corporation. This case illustrates key cross-cultural management and communication elements in Sino-European cooperation and negotiations, and also raises typical challenges posed by inadequate due diligence in the acquisition of or partnership with a Chinese company. The case is about the common pitfalls of quick deal-making and the complexities of the cross-cultural management issues that arise in such a transaction. This case is often used as the basis for a negotiation simulation that challenges students to adapt their communication style and strategy, and to develop their own viable recommendations for addressing a difficult situation. The case and negotiation simulation (see teaching note) can be used for graduate-level study, EMBAs, and executive programs. It provides an excellent teaching tool in a course on doing business in China, doing business with Europe, or cross-cultural negotiation.