Branding BY-HEALTH: The Value and Cost of Transparency

BY-HEALTH Co., Ltd. (BY-HEALTH), a Chinese dietary supplement company founded in 1995, had a first-mover advantage as a contemporary health supplement provider in Mainland China. It had successfully utilized this advantage to conquer a significant portion of the market. However, by early 2017, maintaining this leadership position in the market had become increasingly difficult, largely due to deteriorating public perception of consumables originating in China. BY-HEALTH had sought to differentiate itself by actively making its sourcing and production processes fully transparent to stakeholders, most notably by opening a transparent factory in Guangdong Province.<br><br>While BY-HEALTH’s transparent factory and corporate social responsibility activities developed consumer trust and positively contributed to the environment within which the company operated, they were also prohibitively expensive to maintain. It was also difficult to determine how they affected the company’s bottom line. As he prepared for a company shareholders’ meeting in January 2017, the company’s chief operating officer was faced with difficult questions. What programs should the company continue to invest in for the future? Should some of these initiatives have an end date? If they were ended, what effect would this have on the community? How could he communicate the value of the transparent factory to consumers and shareholders?

This case is appropriate for undergraduate, MBA, and executive students who are being introduced to the concept of corporate social responsibility (CSR) and responsible business practices. It can also be incorporated into a class on market entry from an international business perspective. The goal of this case is to determine the suitability and sustainability of BY-HEALTH’s different corporate social responsibility activities. After working through the case and assignment questions, students will be able to do the following:<br><ul><li>Explain the concept of corporate social responsibility.</li><li>Evaluate the impact organizational actions can have on immediate stakeholders and market conditions.</li><li>Analyze the profit motivation in implementing CSR initiatives.</li><li>Determine the appropriate degree of communication a firm should have with stakeholders regarding its CSR activities.</li></ul>

• marketing, transparent factory, CSR, corporate citizenship