Fuyao Glass America (FGA) is an auto glass manufacturing facility in Moraine, Ohio. This case builds upon the story presented in the documentary film American Factory, which outlines how the Fuyao Glass Industry Group Co., Ltd. purchased a closed General Motors plant to launch a US facility that leveraged the Group's Chinese manufacturing expertise. Students are asked to propose a change-management plan for the executive management team to create an inclusive, engaging workplace that bridges cultural differences and attracts and retains the skilled workers necessary to make this facility successful. The case picks up where the American Factory documentary ends, asking students to consider how they might address the challenges faced by FGA's management team as they attempt to expand their manufacturing techniques in the US. In particular, FGA's leadership wrestles with the following: (1) creating an inclusive, engaging workplace that bridges cultural differences; (2) overcoming the talent management challenges revealed during the unionizing effort by the United Auto Workers; and (3) attracting and retaining skilled workers. This case shares FGA's management challenges from the perspectives of the president and CEO of FGA from 2016 to 2022, and the director of HR/employment management at FGA during most of that time. The two executives share information about FGA's talent management practices and the initiatives implemented between 2017 and 2020 to address issues related to the management challenges and employee concerns raised in the documentary and in media accounts.
In April 1998, Pfizer Inc ("Pfizer") launched Viagra, a prescription drug for treating erectile dysfunction, in the US and Europe with huge success. However, its market entry into China was met with an 11-year battle with local drug companies over Viagra's patent, Chinese trademark and three-dimensional trademark ("3D trademark"). Pfizer's patent was invalidated in July 2004 by the authorities after being jointly challenged by 12 local companies. A local company had launched its own erectile dysfunction drug using Viagra's Chinese nickname as its trademark, and copying Viagra's 3D trademark. Pfizer defended its intellectual property rights ("IPR") in court. It won the patent and 3D trademark litigations, but lost in the Chinese trademark case. Irrespective of the litigation outcomes, Viagra's sales in China have been stifled by prevalent counterfeits and herbal substitutes containing its active ingredient or equivalents. Pfizer's management is trying to figure out what went wrong in its market entry strategy, how to generate more sales before its patent expires in 2014, and what should be done to better protect the IPR of the drugs it intends to launch in the country.
In May 2006, Foxconn International Holdings first discovered a trade secret leakage to BYD Company Limited through current and former employees. Despite successful conviction of four individuals involved, prosecutors dropped all criminal charges against BYD in December 2008. Around 400 senior managers and engineers have left Foxconn for BYD since 2003, posing continuous threats of further infringement of intellectual property ("IP") rights. In response to a deep global recession since late 2008, one of Foxconn's strategies has been to increase investments in research on and production of smartphones, which maintain strong demand relative to traditional mobile phones. Because Foxconn's factories are located mainly in emerging markets with high IP risks, the success of this strategy is being threatened by ineffective IP protection. It is imperative for the company to revisit its IP management strategies, not only to protect its research and development investment but also to generate extra revenue for survival. It also has to devise an appropriate litigation strategy against BYD.
Foxconn International Holdings is the world's largest contract manufacturer of mobile phones. BYD Company Limited entered the market in 2003 and has pursued a learning-by-hiring strategy by actively recruiting workers from Foxconn. In May 2006, Foxconn first discovered a leakage of its trade secrets to BYD through current and former employees. Materials seized from BYD's premises were found to contain substantial non-public information belonging to Foxconn. A number of individuals involved were arrested and prosecuted. However, BYD declared that the information it possessed about Foxconn came from publicly available sources. Foxconn has concluded from internal investigation that BYD has been stealing its trade secrets systematically over a long period. Its management is contemplating pursuing criminal charges against BYD in order to protect its intellectual property ("IP"). (Please refer to case B for China's legal system for resolving IP disputes and factors that influence IP litigation outcomes in the country.)
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.
In the summer of 2007, Mattel, the largest toymaker in the US, made several recalls of products that had been made in China. The recalls led not only to a sharp reduction in Mattel's sales but also to public hearings in the US Congress, which significantly affected Mattel's reputation. Like other toymakers, Mattel has been relocating its production abroad, outsourcing the manufacture of parts and components. Indeed, 65% of Mattel's products are made in China. In contrast to its competitors, however, Mattel has understood the importance of quality control in this relocation/outsourcing process. In the 1980s, it reversed its earlier strategy of outsourcing to factories in Asia by owning and operating some plants in Asia for producing its most popular products. The product recalls show that quality control continues to be an issue. This case explores Mattel's strategy for organizing production, the trade-offs between in-house production and outsourcing, and the trade-offs between different production locations.
In April 2007, Zong Qinghou, founder of Hangzhou Wahaha Group and chairman of all its joint ventures formed with Danone, divulges details about Danone's plan to buy a 51% interest in Wahaha's non-joint venture subsidiaries and related entities that are owned or managed by Zong's family interests. The disclosure of what is supposed to be a trade secret sparks off a series of public accusations, followed by lawsuits by each partner against the other. On the one hand, Danone indignantly retorts that its takeover plan is grounded in a breach of its contractual interest by Zong. Danone alleges that Zong has been making many of the same products as the joint ventures have under the same "Wahaha" trademark through a parallel network of production facilities that he or his family own or manage. He also uses the joint ventures' distribution channels for selling them. On the other hand, Zong argues that the "Wahaha" trademark has never officially been transferred to the joint ventures and complains of Danone's lack of effort throughout. He also accuses Danone of attempting to monopolise China's beverage market by driving out national brands like Wahaha, which are part of China's cultural heritage and thus are the heart and soul of Chinese people. As a way of protesting, Zong resigns from his post as chairman at the joint ventures. Danone then appoints Emmanuel Faber, chairman of Danone Asia Pacific, as the new chairman, but the legitimacy of this appointment is denied by Wahaha. This case illustrates the conflicts in interests, practices and cultural values that foreign investors may encounter with their local partners when doing business in China. It also examines the dynamics of revenue sharing, control rights and contract enforcement between foreign and local partners.
Wang's Fortune Tea, marketed as Wanglaoji in mainland China and considered to be the founder of Chinese herbal tea, grew from a strong regional brand in China with limited national market penetration to becoming China's top soft drink giant with 90% market share of the country's herbal tea industry. This case explores how Wang's Fortune Tea became China's top selling herbal tea brand. The case asks students to analyze the company's growth strategies and to consider if it can continue to sustain its competitive advantage while facing intense competition from domestic and international companies.
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?
Founded in 1996, China Minsheng Banking Corporation Limited ("Minsheng") was the first private commercial bank in China. By 2006, Minsheng had acquired almost US$130 billion in total assets and established almost 330 banking offices across the nation. The Banker magazine consistently praised Minsheng's development, ranking it number 310 in its top 1,000 business banks in the world in 2004, number 287 in 2005, and number 247 in 2006. In early March 2008, Minsheng obtained the green light from the China Banking Regulatory Commission to buy a 4.9% stake in US-based banking holding company, UCBH Holdings, Inc. ("UCBH") for US$95.7 million. The deal would eventually take Minsheng's stake in UCBH to 9.9%, totalling around US$200 million. The acquisition not only distinguished Minsheng as the first Chinese mainland institution to invest in a US bank, but was also viewed as a milestone for Chinese banks entering the US and international markets. On the flip side, UCBH would soon use this opportunity to make its own moves into China, leveraging its affiliation with Minsheng to totalingacquire other Chinese banks. This case examines the process of international expansion through acquisitions in the banking industry and the positioning of a growing bank in the global market, covering issues such as value creation, impact of government regulation and international barriers, the Chinese banking industry and its development, and the associated risks.