• Breaking Barriers: CECA Forging Environmental Advocacy In Mainland China's Ngo Arena

    Amidst the complex landscape of non-governmental organizations (NGOs) in mainland China, CrossBorder Environment Concern Association (CECA) has emerged as an independent grassroots environmental NGO focused on conserving coastal biodiversity. With the vision to become a leading think tank, CECA provides well-founded research findings to authorities through early intervention, ensuring environmental compliance in government-proposed development projects. In its advocacy efforts, CECA emphasizes community engagement and relies on its well-trained volunteers to carry out complex procedures. The NGO sets itself apart by upholding independence, transparency, and refusing government funding or any illicit "guanxi" connection. This raises questions about how CECA secures its funding and diversifies its revenue streams. Furthermore, the partners contemplate how CECA can more effectively demonstrate its environmental and community impact to stakeholders, thereby further enhancing both financial and societal support. Readers are invited to analyze the competitiveness of CECA in the industry, identity success factors, as well as potential challenges. They are also encouraged to propose alternative strategies for CECA to consider, taking into consideration of the missions of the NGO.
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  • Dieselgate - Heavy Fumes Exhausting the Volkswagen Group

    At the end of September 2015, Matthias Mueller stepped in as CEO for the Volkswagen Group, days after Martin Winterkorn resigned over the biggest automotive emissions scandal the world had ever seen. Weeks before, the United States Environmental Protection Agency confirmed the result of investigations proving that Volkswagen had installed software in its most successful diesel engines, which were cheating on the test stand and manipulating results. The successful rapid expansion of Volkswagen's TDI models in the US market was based on fraud. Across brands, about 11 million of the Group's diesel vehicles worldwide were later discovered to have had the cheating device installed. This shattered the worldwide brand and developed into a threat to the formerly pristine image of "Made in Germany" products. Mueller, a veteran of the Volkswagen group, took charge in maneuvering Volkswagen Group out of the crisis, finding technical solutions and regaining the trust of customers, authorities and employees. The Group claimed that the scandal was the result of a chain of errors dating back to 2005. The case illustrates how a failure of proper corporate governance, over-ambitious target-setting and an authoritarian management culture can lead a successful company into crisis. It also leaves us to ponder why a corporate leader in social responsibility could be linked to such a massive scandal.
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  • McDonald's China: The Expired Meat Scandal

    In July 2014, a Shanghai television station revealed that Shanghai Husi, a Chinese subsidiary of a reputable US-owned food supplier, was producing substandard meat products. McDonald's was one of its biggest fast food clients and had been sourcing from the supplier for more than two decades. After cutting tie with Shanghai Husi, McDonald's China and its branches in Hong Kong and Japan were forced to pull a number of products from the menu due to a severe shortage of meat and vegetable supplies. The impact of the scandal was clearly reflected in the poor performance of its sales and stock. The food scare dissipated the general belief that food produced by foreign brands was better than that from Chinese counterparts. With large foreign-owned suppliers in China no longer guaranteeing reliability, what could McDonald's China do to strengthen its supply-chain management? What lessons should it learn from the incident? Would it be better for McDonald's China to run its own food processing plants in China?
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  • KFC China: Still "Finger Lickin' Good?"

    At the end of 2012, an "instant chicken" scandal was revealed in China after a leading national broadcaster reported that chickens reared for KFC in the country were illegally fattened with excessive antibiotics. The local food safety authorities investigated the situation and found that KFC China had been aware of the situation since 2010 but had chosen to remain silent. Local consumers and netizens were in an uproar over the scandal, which eventually in 2013 broke the group's 11-year streak of double-digit growth. A series of marketing campaigns were conducted to rescue the reputation of the fast food giant. The incident reflects the challenges faced by KFC China's supply chain management in ensuring the safety and quality of products from its first-tier suppliers and their suppliers in a subsequent tier. Would the "Finger Lickin' Good" chain be able to rebound fast from the scandal? What could KFC China do about its supply chain and consumers' trust?
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  • Hong Kong Business Intermediary: The Dynamic of Innovative Entrepreneurship

    Hong Kong Business Intermediary ("HKBI") was Hong Kong's first business brokerage company that specialised in small business sales. Leading the company was Edwin Lee, a young entrepreneur who took his every chance to drive the company to new levels of success. In November 2001, after realising that there were no business brokerage firms in Hong Kong, Lee set up HKBI and started to offer "matchmaking" services for prospective business sellers and buyers. As the company diversified into too many additional services without proper planning, the rising operation cost turned into a cash flow disaster for HKBI in 2005. Lee then restructured his business model into a more systematic and integrated way and successfully turned his company around, earning himself the award of Hong Kong's Innovative Entrepreneur of the Year 2007. HKBI's business model and efforts in promoting entrepreneurship had also received recognition worldwide. Meanwhile, local rivals began to tap into the under-developed sector in Hong Kong, and many of them were former HKBI employees. Lee knew when a blue ocean began to turn red, he needed to continue to reinvent his business to safeguard HKBI's market leader position. He envisioned HKBI to become a small business property developer in the future. How did Lee distinguish HKBI from others by associating the business brokerage operation with the finance, private equity and property markets in an innovative way? How did take it as his employees striking out on their own and becoming his competitors while one the objectives of HKBI was to promote entrepreneurship?
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  • Is Sony Turning Around?

    Instead of adopting more commonly used standards that appeal to consumers' taste, Sony's traditional focus on its own technologies has trapped the company in the state of "Galapagos-ization" (garapagosu-ka) that segregates the company from global competition. Since the mid 1990s, the company has been struggling with unstable profit and sales in its core electronics business while it aggressively expands into the entertainment content sector. A number of restructuring strategies had been implemented, but the effect was not sustained due to various internal conflicts within the company. In mid 2005, a non-Japanese, Sir Howard Stringer, was appointed as the first Western CEO and chairman of Sony. Stringer pushed forward a series of operational restructurings and placed a greater focus on software and content development than on Sony's traditional business, hardware technology. Even though Stringer's change efforts had brought a blink of hope for Sony's comeback, the situation turned sour in early 2009 when the company announced its first operating loss in 14 years. While different voices about the problems of Sony arose and the leadership of Stringer was questioned, another round of restructuring attempts was pushed forward by Stringer. How could Stringer overcome the deep-rooted internal resistance that his predecessor had failed to overcome? What had gone wrong with the iconic electronics giant? Were all those restructuring and change efforts necessary and useful to Sony's turnaround?
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  • Crown Worldwide: Integrating Corporate Social Responsibility in Business

    Founded in 1965 by Jim Thompson, the Crown Worldwide Group ("Crown") began as a small moving company in Japan, shifting its headquarters to Hong Kong in the mid-1970s. Within 30 years, Crown had became the world's largest privately held relocation and logistics enterprise, a success that was attributed primarily to the founder's insistence on high service quality and unwavering commitment to community development. With growing concern among customers about CSR, the company recognized that CSR must be integrated into its corporate strategy and day-to-day business operations to achieve sustainability for both the company and society. In 2008, Crown appointed its first CSR director, whose primary task was to develop and implement a standardized global CSR strategy that would support Crown's environmental and community development initiatives. Various CSR integration steps were taken, such as developing global environmental standards, stimulating employee volunteerism, building CSR communication channels, developing a supplier management system and conducting CSR measurement. In line with the goals of the UN Global Compact-a leadership initiative that guided participants in practicing responsible business-Crown would also publish sustainability reports yearly. Although employees were supportive of the company's CSR efforts, the journey of becoming a well rounded corporate citizen is full of complexities and involves a wide range of stakeholders and multi-dimensional issues. Without a roadmap or framework, CSR integration efforts could be daunting, but inaction is no longer an option in light of increasing CSR expectations. What would be the key success factors for Crown's CSR integration?
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  • Green Rubber: The Revolution of the Rubber Recycling Business

    Dedicated to offering high-tech solutions for environmental and social problems, a privately-owned Malaysian conglomerate, Petra Group, aimed to innovate the recycling of rubber waste. Since the 1990s, the group had tried to transform rubber waste using its patented DeLink technology to produce reusable rubber, which it branded as Green Rubber. Despite failing to make a sound industrial impact with the technology in the mid-1990s, the company wanted to reintroduce the eco-friendly solution in the new millennium. Through its subsidiary, Green Rubber Global ("GRG"), the group progressively explored partnerships with those wanted to be part of increasing demand for environmentally friendly products. In 2007, GRG opened the first US-based rubber recycling plant in New Mexico, with the support of the state government. Vinod Sekhar, the founder and chief executive of GRG and Petra Group, envisages Green Rubber becoming a global trademark for most rubber-based products, the way "Intel Inside" has for computers. However, there was industrial skepticism not only about the cost-efficiency of DeLink technology, but also the quality of Green Rubber, partly due to GRG's failure in the market a decade before. Would GRG's past failure be a stumbling block for its future business development? Would increased global expectations for corporate environmental and social responsibility be the stepping stone to a lucrative success? Because "green" claims had been over-exploited by marketers in recent years, there was also cynicism about commercial corporations selling green products. How could GRG successfully run a business driven by commercial principles that also aimed to sustain environmental and social progress? And how will GRG benefit from its connection with the parent company?
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  • AirAsia: Flying Low Cost with High Hopes

    Private entrepreneur, Tony Fernandez took over the debt ridden AirAsia airlines from the Malaysian government in December 2001, months after the terrorist attacks of 9/11. One month later, he relaunched the airline as South-East Asia's first low cost carrier (LCC) and achieved an instant success with increased profitability and rapid route expansion. Under the tagline of "Now Everyone Can Fly", AirAsia was able to keep the lowest cost structure among its competitors and offered low airfare to customers. Being innovative down to the corporate bone, AirAsia pioneered several new services for its operation, including an ambitious plan that many other low cost, short-haul carriers viewed as risky-extending services to include long haul routes. In 2007, AirAsia was ranked as the best LCC in the Asia region. Its success had not only inspired many LCC followers in the Asia Pacific region, but also severely threatened the well-being of full-service operators, especially its major competitor at home, Malaysia Airlines ("MAS"). In May 2008, MAS initiated an unexpected price war by launching the "Everyday Low Fare" campaign, offering zero fare for domestic and short-haul flights, which were largely dominated by AirAsia. Amid surging flight operation costs globally and ever intense competition in the Asia Pacific region, how could AirAsia increase its competitiveness?
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  • Sanlu's Melamine-Tainted Milk Crisis in China

    On 12 September 2008, Sanlu Group, the biggest producer of milk powder in China, rocked the country when it admitted that its infant formula had been contaminated with the toxic chemical melamine. China's national inspection agency extended its investigation to other dairy manufacturers across the nation. Shockingly, products of 21 other dairies, including some famous Chinese brands, also tested positive for melamine. Due to consumption of melamine-laced milk products, more than 56,000 infants and young children had become sick and four babies had died from kidney failure by the end of September. The melamine scare also resulted in many countries recalling and banning goods using milk products from China. When Sanlu became the key culprit in the milk crisis after its infant formula was revealed to contain as much as four times more melamine than other tainted brands, the company apologized to the public. Sanlu also explained that its unscrupulous raw-milk dealers had illegally added melamine to milk. However, it failed to explain its delay in alerting the public when it first received customer complaints in late 2007. Instead, Sanlu had tried to cover up the news until being prompted by its New Zealand partner, Fonterra, which later alerted the New Zealand government. As a result of the milk crisis, the local government of Shijiazhuang, where Sanlu was headquartered, was accused of holding back the news from the central government. Fonterra wrote off all its investment in Sanlu, and Sanlu finally declared bankruptcy on 24 December 2008. The Sanlu incident has spotlighted the inadequacy of China's entire dairy supply chain and has forced the government and the industry to make a collective effort to restore consumer confidence in Chinese dairy products.
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  • Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China

    Lantian Stock was China's first state-owned agricultural enterprise to have gone through the corporatization reform in mid 90's. Since its listing in 1996, Lantian Stock had recorded a dazzling performance in its financial statements. However, in October 2001, its resplendent image was smashed by an academic researcher, Liu Shuwei with her powerful 600-word article that pointed out the liquidity crisis of Lantian Stock. Consequently, all banks in China refused to extend loans to the company. Meanwhile, Liu faced defamation prosecution brought up by the company who initially denied the allegation. The defamation charge was dropped eventually as the Chinese regulators began to unveil the hidden truth that Lantian Stock had indeed involved in misreporting and perpetrating accounting fraud. Chinese media also dug up the controversial background, mythical tales and the previous fraud record of Lantian Stock. Since Liu could uncover the misstatement based on some basic financial ratio analysis, she remained skeptical about why such wrongdoings had not been discovered by related parties earlier. Alternately, the auditing or CPA firm of Lantian Stock commented that the fraud was undetectable as it had gone far beyond what CPAs could discover from its required procedure, and blamed it on the Chinese environment that was conducive to accounting fraud. Was the circumstance of Lantian Stock scandal as what the CPA had claimed?
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  • McDonald's: Is China Lovin' It?

    McDonald's, the world-famous American fast food franchisor, entered mainland China in 1990, when Chinese franchise law did not even exist. In this once-closed country whose market only opened up to foreign investors in 1978, McDonald's had to adapt to an unfamiliar and rapidly changing environment. Not only was food culture in China vastly different from that in the West, but food culture, lifestyles and legal structure were altering as a result of surging economic growth and massive urbanization. Competition was also intensifying as local and foreign restaurants sought to capitalize on China's increasing affluence. As the growing middle class demanded higher standards from these companies, McDonald's local business practices in terms of food healthiness, employee welfare and other socio-environmental issues were put under close scrutiny in China. While the nation's booming economy provided environmental conditions suitable for fast-food culture, the environment also posed challenges to the survival of fast-food operators in the country. Would McDonald's be able to sustain its momentum as China transformed into a developed nation?
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  • PORTS: China's Walk in the Global Luxury Fashion Boulevard

    As a luxury fashion goods producer and marketer, what made PORTS different from other high-end European and American labels was its distinctive background as a China-based company with a Canadian history. The company and the brand, PORTS International, were originally founded in Toronto in 1961 and later acquired by a Chinese immigrant entrepreneur, Alfred Chan, in 1989. Despite being made famous in North America and UK during the 1970s and early 1980s, the brand lost its glory in the early 1990s because of a global recession and poor management. In 1993, Chan decided to rebuild the brand by moving to Xiamen, China where he established the new headquarters and factories. After that, the brand continued to be ranked as one of the top most desirable fashion labels in China. In 2003, the company went public on the Hong Kong Stock Exchange and started slowly entering the Western market. A new label, PORTS 1961, was created for the comeback and to target more high-end consumers. Although China was one of the world's biggest manufacturers of apparel products, China-made products were often associated with cheap, low quality and counterfeits. Since image is paramount in the world of luxury goods, how would PORTS overcome this perception of its goods, as well as other challenges, and further expand its presence in the local and global market?
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  • The Era of Corporate Citizenship: Perodua's Advertising with a Social Dimension

    As a home-grown compact car maker in Malaysia, Perodua has integrated social messages into its corporate advertisements since 1999, seeking to enlighten the local audience about various social issues and values. With the growing concern of corporate social responsibility ("CSR") globally, company advertising with a social dimension ("CASD") seemed to be an effective way for Perodua to portray its good corporate citizen image. However, the impact of the ads on direct and tangible returns in the form of sales was hard to determine. Since 2005, trade liberalization in South-East Asia resulted in reduced government protection for Malaysia's indigenous automotive industry and there was more emphasis on corporate differentiation strategies. In response to the escalating competitiveness and the increasing interest in CSR, Perodua's corporate leaders and its management had to rethink how corporate advertisements emphasizing social aspects could sustain the company's profitability and reputation in the long run. Besides, controversies easily arose when social issues such as race-related topics were not handled with sensitivity, given the diverse cultural context of Malaysia. Set in the context of an industry characterized by intensifying competitiveness and in a multicultural environment in which the social impact of advertising is emphasized, Perodua's strategy of CASD becomes very interesting.
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  • Yinguangxia: An Epitome of Corporate Governance Flaws in China

    Yinguangxia ("YGX"), a joint stock listed company in China, has captured much media attention since the mid-1990s for its contribution to China's eco-agricultural industrialisation and modernisation of traditional Chinese medicine. The astonishing leap of its share prices, about 440% in 2000, caused journalists at Caijing, a local reputable financial magazine, to be suspicious and they set off to investigate YGX. On 2 August 2001, Caijin published an article alleging YGX's misrepresentation of export activities, which involved its Tianjin subsidiary's sale of biologically extracted products to a German company, Fidelity Trading GMBH. A profit overstatement of US$93 million from 1998 to 2001 was eventually revealed by China Securities Regulatory Commission, and four of the company's senior officials, including the former CEO and CFO of YGX and Tianjin Guangxia, were sent to jail for forging documents and fraudulent misrepresentation of information. The operating licence of the company's external auditors, Zhongtianqin, was revoked and the professional certificates of its two certified public accountants were repealed. The scandal also resulted in the investors' crusading pursuit of private indemnification against their investment loss; the legal protection of private shareholders in China remained an issue of great concern in the country. Having been a top performer on the Chinese stock market, YGX's fallout has revealed the deficiencies of the corporate governance system in China. It also brings to light the problems involved in auditing practices in China.
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  • Procomp Informatic: Stepping on Ethical Landmines in Asia

    The collapse of Procomp Informatics Ltd, a major Taiwanese chipmaker, has been regarded by Taiwan's market watchdogs as similar to the scandal of the U.S. energy giant Enron in 2001. In June 2004, Procomp defaulted on a bond payment and structured for bankruptcy, despite a huge cash balance recorded in its books. It was discovered that the company's executives and its overseas sales agents had colluded in overstating sales revenue, manipulating stock prices, illegally leveraging assets, and arranging bonds through paper companies. The incident left thousands of company shareholders with massive financial losses. Raises concerns about corporate governance and risk management of public companies in Taiwan, and calls into question the credibility of the financial reporting process, companies' internal controls, and corporate ethics in the Asian context.
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  • Business Corruption in China

    Provides an overview of business corruption in China, placing it in a context that takes into account various political, economic, legal, and cultural elements. More specifically, it examines corporate ownership and structure in China, identifies sources of corruption, and analyses the impact of corruption on the country's social and economic stability. Closes with a set of recommendations for countering business corruption in China.
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  • AccuForm: Ethical Leadership and Its Challenges in the Era of Globalization

    AccuForm, a German-Hong Kong joint venture specializing in the production of chemical coatings for application to garments, is confronted with a situation where an unauthorized Chinese manufacturer had stolen one of AccuForm's experimental coatings, applied it to their own brand of clothing, and sold it to the public as an AccuForm product. The product had caused allergic reactions in some children, and the media had widely reported the incident. It was later discovered there was more to the situation than stolen coating, as some staff were found to have engaged in money laundering, misappropriation of company assets, acceptance of illegitimate rebates, and bribes. The general manager of AccuForm, in addition to having to deal with the media, also had to find a way to resolve the differences in business practices between the company's German and Hong Kong parents, which are thought to have been partially responsible for the incident, as well as rebuild staff morale and customers' confidence in AccuForm's products. Illustrates how differences in company cultures can create difficulty for management, and what are formulas for success in one country may be guarantees of failure in another.
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