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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.

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 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.

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 negotiated year 2005/2006, Brazilian iron ore giant Vale, negotiated a 71% price increase with its Chinese customers. For the same period, Australian BHP asked for a premium reflecting the freight cost differentials between shipping iron ore to China from Australia versus Brazil. This demand was later dropped due to strong opposition from Chinese steelmakers. In the negotiated year 2007/2008, following price increases of 65-71% negotiated by Vale, the other Australian Iron ore giant, Rio Tinto, demanded and obtained a premium that saw the total increase in prices reach 200% from the previous year. This case analyses the motivations behind these price negotiations in the light of BHP's intended hostile takeover of Rio Tinto, which would result not only in a combined market share of almost 40% in the production of traded iron ore but a monopoly in the supply of Australian iron ores. This case can be used in business classes, negotiation and strategy as will provide students with different aspects of the negotiation process. Issues such as hostile takeovers, pricing, market share and business relations are discussed in this case.

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.

PepsiCo introduced Lay's potato chips to China in 1997. As its chips business grew in China, it faced increasing difficulties in securing a reliable supply of quality potatoes. In the North American market, Pepsi relied on external suppliers for its potatoes, but in China, it ran into problems both in sourcing locally and in getting its US supplier to grow potatoes on its behalf. The matter was further complicated by the fact that the Chinese government had banned the import of potatoes. Faced with numerous obstacles in sourcing potatoes in China, how should Pepsi go about securing this critical input? Should it rely on external suppliers given China's immature agribusiness industry, or should it integrate backwards to grow its own potatoes?

n December 2006, eBay, Inc, a US company that offers e-commerce, e-payments and internet communication services globally, announced its plan to form a joint venture with China-based online portal and wireless operator, TOM Online, that would give each company 49% and 51% ownership, respectively. This was eBay's third strategic move in China, following its acquisition of a 33% stake in domestic counterpart EachNet in 2002 that marked its entry into the market, and a full acquisition in 2003. Despite the initial good results, eBay had been losing market share to local rival and Alibaba's fully-owned subsidiary-TaoBao. By 2006, eBay had seen its market share drop from a high of 85% to a staggering 29%, while TaoBao's continued to increase, reaching 60%. The joint venture was therefore an attempt by eBay to save its failing Chinese operations. The move also reflected the increasing difficulties foreign internet companies were facing in China because of fierce competition and a changing market environment. eBay believed that it would benefit from TOM Online's local knowledge and political connections. However, some analysts questioned whether political connections alone were the answer and suggested that eBay focus on its product and service offerings instead. How could eBay leverage the joint venture to its success in China? What alternatives did eBay have for enhancing its strategic position in the Chinese market?

China's rapid economic development since the late 1990s makes it one of the most appealing places for international investors. Te Chinese beer industry has tempted nearly every big multinational brewery looking to boost sales away from the relatively saturated markets in the developed countries. At such a contextual time, Anheuser-Busch and SABMiller, the world's top two breweries, involved in a fierce acquisition war for the Chinese fourth-largest brewery and the dominant brewery in the North-eastern region, Harbin Brewery. At the same time the China's largest brewer, Tsingtao, is reorganizing its business after several years of growth through acquisition. How can the company optimize its portfolio of brands and consolidate without loosing ground in the rapidly growing Chinese beer market?

Since the first Carrefour outlet opens in China in 1995, the company makes outstanding achievements in the Chinese retailing market. In 1999, it is ranked as the third largest Chinese retailer and second in the franchising sector. By 2000, its sales in China has exceeded US$0.99 billion and by 2004, the number of outlets has reached 62, representing a 51.2% increase from the previous year and nearly equivalent to the total outlets of two other large, global retailers combined-Wal-Mart (43 outlets) and Metro (23 outlets). Recently, however, local retailers have become more competitive and other global retailers have also started to strengthen their presence in China. Moreover, retailers have begun to move inland and into second-tier cities where Carrefour lacks presence. Faced with such challenges, will Carrefour be able to maintain its past glory in China?

On 9 April 2005, the leading global direct-sales cosmetics company, Avon, gained exclusive rights from the Chinese government to test the direct-selling model in China. This provided Avon a rare opportunity to expand its business, especially given that the demand for cosmetics in China had skyrocketed in the past decades. Since China banned the direct sales model in 1998, Avon had successfully adopted the traditional sales model of boutique and counter stores. Although the direct sales model had worked well for Avon in almost all other markets in the world, the traditional sales model had proved to be very successful in China. How should Avon exploit this opportunity of direct selling in China?

Wumart Stores (Wumart) is a privately owned, indigenous Chinese retail chain operation founded by a private entrepreneur in 1994. The decade after its inception saw the company grow from a small, suburban supermarket to the seventh largest chain retailer (over 500 stores) in China. By using regional market positioning focusing on one of China's wealthiest regions--Beijing; implementing low-cost expansion strategies; taking the opportunity to restructure state-owned assets; employing multi-format store development in both the most mature and fastest growing segment; and making the earliest commitment to information technology among its domestic peers, Wumart establishes strong competitive advantages that set it apart from its domestic competition. On the company's 10th anniversary, China fully opened its retail sector to foreign participation. Vying for a share in China's vast consumer market, but having been hindered by many regulatory obstacles, foreign retailing giants can now compete on a level platform backed by their ample financial resources, deep industry and management expertise, and long-term commitment to China. The market is becoming ever more competitive and is expected to experience massive consolidation. In the end, only the best performers with significant scale will survive. The test is for Wumart's management to develop strategies to sustain its competitive advantages in the face of challenges from both domestic peers and foreign giants, to carry on the success story, and to eventually realize its ambition of becoming an everlasting national brand.

As the largest iron ore consumer and steel producer, China accounted for 35% of world iron ore imports and over 25% of world steel production. Two-thirds of the iron ore market was dominated by only three companies--Australian-owned BHP Billiton Ore (BHPBIO or BHP), Rio Tinto Hamersley Iron Unit (RTHI), and Brazilian-owned Companhia Vale do Rio Doce SA (CVRD). In February 2005, following a deal between CVRD and Nippon Steel, the price of iron ore increased by 71.5%. This deal, together with the advantage of lower-cost freight advantages for Australian iron ore, led BHP to ask for an extra charge from Chinese companies. Chinese steel producers strongly opposed this demand and in April 2005 the proposed price increase was dropped for the sake of future trade relations with China. However, BHP was still keen on implementing it in the future.

The world's leading cosmetics companies are competing with--and buying--local cosmetics firms for a share of China's vanity cash. French cosmetics giant L'Oreal is grabbing a major share of the Chinese make-up market. The company recently announced its acquisition of Chinese cosmetic brand Yue-Sai. The surprising announcement came just 45 days after L'Oreal made a successful bid for Raystar Cosmetics (Shenzhen) Co. Ltd's skin-care brand, Mininurse, at the beginning of the year. L'Oreal has been very successful in China's high-end and middle-segment cosmetic markets. The recent two acquisitions, however, indicate that L'Oreal is focusing more on the mass market and shows its determination to step up the pace of its growth in China. It also indicates how red-hot the cosmetics trade has become in China. What competition is situation L'Oreal facing? How can L'Oreal retain its leading position in China? Is it through more acquisitions or improving on its own products? What will be the impact of the future tariff reduction?

An unprecedented bidding war for the Chinese fourth-largest beer maker, Haerbin Brewery, broke out between the world top two breweries--Anheuser-Busch and SABMiller. Presents the different strategies these companies adopted to enter Chinese market. Anheuser-Busch entered the Chinese market with its nearly fully owned subsidiary and promoted its own brand, Budweiser, whereas SABMiller knocked through the market with its joint venture with CRE. Its expansion in China came mostly through mergers--it did not introduce into the market its own world-famous brand. Anheuser-Busch, on the other hand, went down the acquisition road, first with Tsingtao and then with the Haerbin brewery.

The joint venture between General Motors (GM) and Shanghai Automotive Industry Corp. (SAIC) in 1997 was regarded as the largest single foreign investment ever made in China. The joint venture was considered by many as a high-risk investment for GM at that time. Eight years after signing the joint venture, GM proved to the world that its investment in China was justified, with its growing market shares and successful partnership with SAIC. Attempts to understand the strategic alliance between GM and SAIC and how the relationship contributes to the success and rapid growth of GM in China. Also analyzes the strategies adopted by GM and the potential threats and challenges imposed on foreign automobile companies in China. Sheds light on devising viable strategies for foreign companies to enter emerging markets.

Describes the landscape of China's beer industry and its competitive environment in 2004. Depicts industry characteristics, namely, demand, products, sales channels, segmented markets, and imports. Also profiles the major local and foreign players in the market and their expansion strategies and entry modes, analyzes the major industry issues, and provides insight into the future development of the industry.

Describes the landscape of China's home appliances industry and its competitive environment in 2004. Depicts industry characteristics and new developments, including technology, distribution, and marketing. Also profiles the major local and foreign players in the market, analyzes major industry issues, and provides insights into the future development of the industry.

At the dawn of the 20th anniversary of its involvement in China's passenger car industry, Shanghai Volkswagen (SVW) found itself caught in changed external and internal environments, with factors critical to its past success gone or quickly diminishing. Although taking first-mover risks has rewarded Volkswagen with a dominant market position and high profitability, such dominance and profitability might not be sustained in the long run as the competitive landscape transforms. The test is whether SVW can quickly adapt to the new environment and establish a new set of competitive advantages that positions it favorably against its rivals.

On August 2, 2000, Korea-based Pohang Iron & Steel Co. Ltd. (POSCO) and Japan-based Nippon Steel Corp. (NSC) crafted a cross-border, cross-shareholding alliance. At a joint press conference, the two companies said their alliance was not limited to their firms alone and said approaches from others would be welcomed. Their invitation had aroused the interest of the largest steelmaker in China, Baoshan Iron & Steel Co. Ltd (Baosteel). In January 2001, Baosteel signed a memorandum of understanding with POSCO to create a cross-shareholding in each other's shares. The company also planned to invite NSC to acquire a stake in the group. If the Sino-Japanese alliance succeeded, the three steel giants would form a three-way cross-border, cross-shareholding alliance. Such a bold move would help Baosteel to gain an upper hand in competition with European and American steel firms eager to enter the Asian market.