As news of the Tiannanmen Square incident of June 4th reached Kevin O'Donnell, SIFCOUSA, he wondered whether the board would or should approve the JV
Case Title
SIFCO Industries, Inc (China)
Case Author(s)
Liming Zhao
University
University Of Alabama
Abstract
The case describes the complexity of joint venture negotiations in manufacturing sector that involves trans-national partners: private investors, government and government assisted or controlled businesses. SIFCOUSA, a world leader in the steel forging technology with many joint or technically assisted ventures explored the possibility of establishing a joint venture with Shanghai Heavy Die forging Plant (SHD), China, owned by Shanghai Mechanical & Electrical industrial Investment Corporation (SMEIIC). A review of business environment and strategic considerations such as demand, modernisation, low labour cost, China's economic outlook, encouraging JV laws etc., in China motivated SIFCOUSA to examine the joint venture partnership with SHD, which had good credentials from American Bureau of Shipping and Registrar of Shipping, China. The joint venture had many complexities as cost of technology transfer, workforce retention, export price, commissions, norms for the new project feasibility and equity had to be agreed. As new joint venture partners (Hong Kong and Thailand) evince interest, inordinate time was spent on negotiation, building consensus and reaching an agreement among the three parties: SIFCOUSA, SHD and the Thai investor (30% equity). Negotiations lasted for two and half years, involving three visits from SIFCOUSA and one visit from the SHD. The MOU for this JV was finally submitted in May 1989, subject to clearance by the respective boards. As news of the Tiannanmen Square incident of June 4th reached Kevin O'Donnell, SIFCOUSA, he wondered whether the board would or should approve the JV.
Available In
Strategic Management in the Asian Context: A Casebook in Business Policy and Strategy/ Luis Ma. R. Calingo
Publisher
John Wiley & Sons (Asia) Pte Ltd
Publisher Case No.
Distributor(s)
John Wiley & Sons (Asia) Pte Ltd
Pub/Rev Date
1997
ISBN
0-471-19003-9
Case Length
18
Teaching Note
No
Pub TN Ref No.
Pages (TN)
Issues
International Business Ventures, Joint Venture Negotiations
Organisation(s)
Steel Improvement And Forge Company (SIFCO)
Countries
China
Industry
Metals & Mining
Period Covered
1989
Level
Undergraduate/Postgraduate
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