HOW TO AVOID GETTING BURNED IN CHINA AND INDIA
Foreign companies need to structure and manage their strategic partnerships carefully, according to columnists Anil K. Gupta and Haiyan Wang
Anil K. Gupta and Haiyan Wang
Business Week, March 1, 2010
The recently concluded Danone-Wahaha feud holds important lessons for any company on how to structure and manage strategic partnerships in markets such as China and India.
In the late 1990s, France's Groupe Danone entered into several joint ventures with Hangzhou-based Wahaha Group to pursue opportunities in China's beverage market. Although Danone held a 51% ownership stake in the JVs, it assigned only a handful of managers to work in them. As a result, its control over and visibility into their operations and finances appear to have been extremely limited. Real control rested with Zong Qinghou, founder and chairman of the Wahaha Group and, by all accounts, a brilliant entrepreneur. The feud surfaced in 2007 when Danone alleged that Zong's independently owned companies had been manufacturing the same products with the same trademarks as the JVs, selling them through the latter's sales and distribution channels. The dispute ended in October 2009 when Danone agreed to sell its stake to Wahaha at a 21% discount to the book value.
In emerging markets such as China and India, regulatory requirements and lack of local knowhow often compel companies to work with local partners without the ability to hold complete or even a dominant ownership stake in the local operations. Thus, the question is not whether Danone should have entered into the JVs in the first place. Rather, the relevant question is whether Danone could have been smarter at structuring and managing its partnership with Wahaha.
(...) [artículo aquí]
Foreign companies need to structure and manage their strategic partnerships carefully, according to columnists Anil K. Gupta and Haiyan Wang
Anil K. Gupta and Haiyan Wang
Business Week, March 1, 2010
The recently concluded Danone-Wahaha feud holds important lessons for any company on how to structure and manage strategic partnerships in markets such as China and India.
In the late 1990s, France's Groupe Danone entered into several joint ventures with Hangzhou-based Wahaha Group to pursue opportunities in China's beverage market. Although Danone held a 51% ownership stake in the JVs, it assigned only a handful of managers to work in them. As a result, its control over and visibility into their operations and finances appear to have been extremely limited. Real control rested with Zong Qinghou, founder and chairman of the Wahaha Group and, by all accounts, a brilliant entrepreneur. The feud surfaced in 2007 when Danone alleged that Zong's independently owned companies had been manufacturing the same products with the same trademarks as the JVs, selling them through the latter's sales and distribution channels. The dispute ended in October 2009 when Danone agreed to sell its stake to Wahaha at a 21% discount to the book value.
In emerging markets such as China and India, regulatory requirements and lack of local knowhow often compel companies to work with local partners without the ability to hold complete or even a dominant ownership stake in the local operations. Thus, the question is not whether Danone should have entered into the JVs in the first place. Rather, the relevant question is whether Danone could have been smarter at structuring and managing its partnership with Wahaha.
(...) [artículo aquí]
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