The China Venture

much business data in China and the speed of change and development in the environment.
There, many plans will prove inadequate and unable to reflect actual developments. In this
respect, a large pool of applicable and reliable information from efficient sources will be
particularly helpful, as it helps to differentiate between discrepancies caused by slower
development of an otherwise well designed business and those caused by operational or
strategy related flaws of the company.
An organisational structure for gathering information and feedback together with processes to
periodically re-evaluate the business, should form the basis for post-entry strategic success.
However, these structures and processes can only be utilised to their fullest if they go hand in
hand with the will, determination, and power to actively reposition the Chinese business if
necessary.
The will and determination will have to be achieved by appropriate internal monitoring and
management processes. The power to do so, however, is often won or lost during the initial
phase of negotiations with one’s partners. If the joint venture partner has a significant share in
the ownership of the project, strategic change may be very difficult to achieve. This may
result, as the examples below will show, in outright failure of the whole project and total loss
of the investment. For this reason, the possibility for significant strategic repositioning needs
to be taken into account already in the business formation phase.
The need to reposition one's activities will be larger in China than in a more stable business
environment. The challenges faced in trying to achieve such goals may easily be
underestimated. The following examples and case-studies will show how the need for re-
evaluation and repositioning can arise in reality. Some of the dire consequences of the lack of
planning for exit strategies can surely be avoid ed by openly discussing and accounting for
various developments that might make strategic change necessary.
4.1.2 Case studies
4.1.2.1 Luxury goods company in China (LGC)
LGC is a family owned company supplying highly priced fashion jewellery to a world market.
With around 9200 employees the company generates a turnover of around 1.4 billion CHF. It
operates globally with more than 70 group companies, most of which are sales offices. By the
early 1990s, the company operated two production facilities in Asia. One of them in Thailand
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