Since China's accession to the World Trade Organization in 2001, economic relations between China and the US have deepened. Along with closer ties, however, has also come greater political conflict. In this case, students will analyse the current Sino-US diplomatic relationship through two distinct lenses: 1) bilateral diplomatic relations; 2) economic theory. By understanding the complex political and economic factors underpinning the relationship, students will be called on to propose potential solutions to avoid further escalation.

This is a fictitious case in which Universal Studios, a major US theme parks and resorts company, has to negotiate with China's central government to build its first theme park in the country. Students are divided into groups, and each student is assigned a role as one of the negotiators or as an observer. The topics covered in the negotiation include the new theme park's location, ownership structure, size, nature of theme zones, local employment and hospitality training programmes. The case allows students to experience the difficulties of conducting negotiations in a cross-cultural setting.

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.)

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.