Partnering In China The Right Way...

CLIENT: Equipment manufacturer.

PROBLEM:

The company was trying to establish a joint venture in China and was having trouble evaluating the best structure and conducting due diligence on potential partners. They had discussions to establish a joint venture with a Chinese company that had strong trading experience in the industry. But the potential Chinese partner had no experience in manufacturing and servicing equipment. The Canadian company believed a joint venture with a Chinese partner was needed to enter the China market, and the potential Chinese partner was aggressively pursuing the Canadian company to establish one with them.

OPPORTUNITY:

China is one of the world’s three largest markets for their product. If the Canadian company is to establish a global leadership position for this new product, they must have a significant market position in China.

DELIVERABLES:

We evaluated their approach to China and recommended they reconsider their strategy, providing four deliverables to them, including:
•Facilitating re-development of the Canadian company’s strategic priorities and direction in China.
•Finding a more appropriate potential joint venture partner that better met the Canadian company’s needs.
•Locating an independent China-based project manager with direct experience in their industry segment who could provide hands-on management of the Canadian company’s requirements during the joint venture’s viability assessment and start-up period, giving the Canadian company in-China management input independent of their potential partners during critical start-up phase, and
•Introducing the Canadian company to legal and accounting professionals who could meet its unique needs.

OUTCOME:

The Canadian company saved more than $500,000 by not concluding a deal with an inappropriate partner in China. We introduced a professional, honest partner in China whose strategic direction compliments that of the Canadian company.