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This case study focuses on the evolution of the venture and describes an important
component of dealing with the domestic market-sales and marketing. This description
originally appeared in Business China (July 29 and August 12, 199 1) and is adapted here
with permission of the publisher, Business International Asia/Pacific Ltd.
Polaroid has been selling directly into the China market since the early 1980s, primarily
via its Hong Kong regional office marketing, subsidiary. By the mid- 1980s, Polaroid was
ready to explore the next steps, and talks with the central government led Polaroid to
initiative discussion with the Shanghai Motion Picture Industry Corporation (SMPIC).
Polaroid eventually set up a subcontracting arrangement with the Chinese enterprise. In
return for Polaroid's upgrading one of SMPIC's factories, Shanghai 20anfeng, the Chinese
would assemble printed circuit boards for use in Polaroid's Supercolor 635CL instant
cameras.
To bring Xianfeng up to speed, Polaroid provided capital equipment, trained the work
force, and upgraded the factory' As a result, the Chinese have been supplying printed circuit
boards to Polaroid manufacturing plants around the world since 1989. Polaroid in the
meantime had a chance to evaluate operating conditions in China, cement ties with its
partner, build up the Chinese side's production skills, assess the feasibility of a larger
commitment, and set the basis for a solution to the foreign exchange problem.
In mid- 1990, Polaroid took the equity plunge, signing an agreement to set up Polaroid of
Shanghai with SMPIC. The Xianfeng factory has since become part of this larger operation.
In addition to the assembly of printed circuit boards, the joint venture will assemble instant
cameras. package film and gradually assume marketing responsibility for the entire Polaroid
product line in China. So far, the camera maker, which holds 73% of the joint venture's
equity, has invested close to $2 million in the project.
The transition from subcontracting and assembly to a full-fledged joint venture
manufacturing operation has gone practically without a hitch. Polaroid attributes this to the
evolutionary nature of its relationship with SMPIC and Xianfeng. All the camera maker had
to do to get the joint venture up and running was add some new assembly equipment,
introduce a detailed program for camera manufacture, and assign two expatriates to manage
the project on the ground. Polaroid has also intensified training.
At first the venture assembled cameras from kits for local consumption. In 1992, It
began moving toward full vertical integration of the assembly operation. Polaroid wants to
source a substantial portion of its inputs locally within three years.
For the moment, sales of china-made printed circuit board generate enough foreign
exchange to meet the joint venture’s needs. As the venture grows, that need will become
greater, and Polaroid plans to meet it by introducing another component for local
manufacture at the joint venture.
Management programs have not been severs. To help keep the 180-person work force
productive, Polaroid has instituted amenities such as transportation between home and
factory, new windows and lighting in the factory, and washing machines, dryers, irons, and
ironing boards for personal use.