ERIC was one of the first American companies to venture into China. The high demand for specialty chemicals in China was derived from its rapidly expanding industrial capacity. ERIC has invested UD$250 million in four JVs employing about 1450 people in the country.
ERIC was one of the first American companies to venture into China. The high demand for specialty chemicals in China was derived from its rapidly expanding industrial capacity. ERIC has invested UD$250 million in four JVs employing about 1450 people in the country.
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ERIC was one of the first American companies to venture into China. The high demand for specialty chemicals in China was derived from its rapidly expanding industrial capacity. ERIC has invested UD$250 million in four JVs employing about 1450 people in the country.
Copyright:
Attribution Non-Commercial (BY-NC)
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Download as DOC, PDF, TXT or read online from Scribd
back to the Indiana, US headquarters of ERIC was one of the first American the Performance Polymer Division of companies to venture into China. The ERIC had been approved. Three years high demand for specialty chemicals in earlier, Stanley, a Hong Kong-born US China was derived from its rapidly citizen, had been appointed as the expanding industrial capacity. To date, general manager of the Wuhan ERIC ERIC has invested UD$250 million in Polymer (WEP) joint-venture (JV) plant four JVs employing about 1450 people in Wuhan, Hubei Province, China, after in the country. A key HR policy for ERIC leading the team that negotiated the JV. in China was that the company should Just one year ago, Stanley was given be regarded as local, and not one that added responsibilities as the division is run by expatriates. As such, ERIC general manager of the China Region worked hard to get as many position as for Performance Polymers Division. possible filled by Chinese persons. While Stanley enjoyed the challenges Although several key positions in the he faced to get the Chinese JV up and JVs were still held by foreigners, running, a return to Indiana was the cultivating a strong management team best for his family. Stanley went to of native Chinese was a high priority. China alone – he and his wife decided that it was in the best interest of his The Wuhan ERIC Polymer Co Ltd JV two schooling-age kids that the family stayed in the US. Since his transfer date To expand its production in China, was still a few months away, Stanley Performance Polymer had joined with would take time to prepare his unit for Wuhan Plastic Factory to form WEP. A the eminent change: “I worked too hard leading Chinese state-owned enterprise to let this waste away,” he thought. He and the biggest hard-plastics producers thus saw his main task would be to in the Wuhan region, Wuhan Plastics nominate a successor. The human employed approximately 1,800 people. resource department sent six resumes Unlike the other state-owned for consideration and as he was enterprises, the company has achieved studying the resumes (and jotting notes international recognition for producing – see summary in Exhibit 1), Stanley high quality products. About 50 percent wondered which one would soon be of its products were exported to the occupying the chair in which he neighboring nations and its greatest presently sat. achievement to date (according to the management) was receiving the ISO ERIC Inc 9002 certification. ERIC, based in Ohio, developed and produced specialty chemicals. The Through the JV, ERIC hopes to exploit company’s four divisions, Performance the fast-growing market for high-quality Polymer, Additive, Textile Dyers and resins and hardeners in the Asia Pacific Pigments, had sales in 80 countries, region and to establish the first manufacturing plants in 21, research multination polymer plant in China. and development facilities in six and a Wuhan Plastics objectives were, in the total of revenue of US$5.1 billion in order of importance, to access modern 2001. The Performance Polymer manufacturing knowledge, to access Division’s US1.6 billion in revenue Western management skills and to get comprised 33 percent of the company’s foreign exchange. On paper, the total. Wuhan-ERIC JV was a 50-50 JV. In terms of resources investments however, ERIC contribution amounted to about 65 In both phases, Stanley interacted percent and Wuhan 35 percent. weekly with the JV partner and Critically, the WEP plant provided no government officials. Through a close cost advantage. Higher labor costs in relationship with the Wuhan Plastics the US were offset by higher directors and infrastructure manager, productivity. If anything, the WEP plant Stanley sought to solidify their costs more to set-up because it used commitment to provide utilities for the the more advanced computer system. plant. Stanley’s most frequent interactions were with the Wuhan Like the other division in ERIC, municipality Vice mayors for foreign Performance Polymers Division focused trade and Economic relations, on delivering high quality products managers from the Environmental rapidly and reliably. Contrasted with the Agency, state bank managers, custom bulk chemicals, the division officers and Planning Bureau directors. manufactured relatively small batches, In a week, he attended as least one often tailored to a customer’s needs social function, including dinner with and charges a premium. Nonetheless, partners and government officials and like the other divisions in ERIC, opening ceremonies for ERIC’s JV as Performance Polymers Division was well as those of other multinationals. committed to cost leadership through Stanley also attended both monthly improvements that lowered costs and meetings with managers of other improved quality. The WEP plant was foreign JVs to exchange information and held to the same world-class standard business promotion functions in which as its other sisters in the Performance the government used WEP’s success in Polymers Division. Partly due of China to woo other investors. WEP’s government requirements, WEP story was the most “popular” success sourced much of its raw material story because of its state-of-the-art locally. manufacturing technology. Last but not least, Stanley frequently hosted dinners Stanley’s Responsibilities and outings where he entertained top Chinese leaders (at least once a Stanley’s activities at the plant evolved month) and visiting ERIC executives through two phases. During the first (every three to four months). phase, he monitored plant construction, obtained environmental and import Stanley – the Divisional Manager of permits, sought taxation relief, tacked China Region financial concerns such as foreign Stanley’s appointment as the division exchange procedures and payments to general manager of the China Region suppliers, selected and trained key staff for Performance Polymers Division and coordinated activities between added more responsibilities and duties Chinese and American engineers. In the to his already full plate. His “new” post start-up phase, Stanley responsibilities included: concentrated on developing and • motivating the marketing and building his management team. His sales staff, setting sales targets, primary objective was to build a strong visiting customers with corporate culture that integrated salesperson and ensuring Chinese and American values in the responsive customer services; pursuit of excellence. He also oversaw • establishing divisional production the plant operations and responded to objective and apportioning safety issues. responsibilities to the plants in Chinese managers qualified to operate China and Taiwan; in Western enterprises and fierce • monitoring financial indicators competition for the services of the (profitability, cash flow and asset available few. Although some of WEP management) and managers had increased their skills, • overseeing employment planning Stanley believed that the local talents for the division, encouraging have not yet adopted enough of the management development and Western management orientation resolving personnel problems. essential for effective corporate management. In addition, his ambassadorial duties On the issue of increasing competition, greatly increased, as did his Stanley believed that the new manager responsibilities for government needed to look into cost containment, relations and negotiations for new JVs. “de-bottlenecking” processes, and more Mindful of the Chinese practice of aggressive marketing and sales "renqin," meaning the exchange of programmes to increase sales. Yet favors between people or "rubbing each another important issue was fine-tuning other's back," he tried to respond to the organization and continuing staff requests for assistance. Initially, even development. with these new responsibilities, Stanley devoted more time to WEP. Once he As expected, most of the WEP was satisfied that his management employees worried about what would team was ready to take on more happen after Stanley left. Alison Deng, responsibilities, he shifted his focus on the deputy general manager expressed his divisional duties. As such, Stanley the beliefs of many: spent a lot of time travelling. Aside from the one to two weeks per month spent We are especially worried to see a at WEP, he was travelling within China, non-Chinese expatriate being sent Hong Kong and Taiwan (meeting from Indiana to be in charge of this customers and managers in Shanghai, operation. Verbal communication is Guangzhou, Beijing and Hong Kong) essential here. A manager who can and returned to Indiana three times a only speak English would be able to year to meet HQs executives. In communicate effectively with the addition, he travelled frequently to Chinese subordinates. We have to Xiantan, Hunan Province to shepherd wait and see but I am not optimistic negotiations for another JV. about the new general manager.
Nominating a Successor While suffering from his daily stress
headache, Stanley leaned back in his This was not going to be easy. And the chair. Upon reviewing the resumes, he future responsibilities of whoever would wondered who would be the best replace Stanley would be even greater. candidate for the job. "This is my third As China was regarded as a critical baby - I need good strong hands," he market for ERIC, the division manager told himself. As he unscrewed the cap and divisional manager would need to from a bottle of aspirins, he wondered if become even more involved in JV he should leave a new bottle on his negotiations and plant constructions. desk as a welcoming gift for his Moreover, with the rapid expansion successor. plan, the new boss would have to address a few strategic concerns. Two vital concerns were ongoing shortage of