Zhejiang Haili Electronic Technology Co., Ltd (Holip) (A2) Harvard Case Solution & Analysis

IMD-3-2052 © 2009
Nie, Winter; Ryans, Adrian; Lu, Abraham Hongze

The case describes how Fang Guangming, a serial Chinese entrepreneur, entered the comparatively high technology frequency converters business from the stuffed toy business where he started. Holip started by engineering Japanese products, outsourcing capital intensive parts of the manufacturing procedure and restricting Holip’s generation role to testing and final construction. Holip elected for a sales strategy that worked well with local Chinese customers. Its early success was mainly due to customized services, fast response time and low prices. The corporation suffer losses in its initial year, and then immediately became prosperous by having a very lean cost structure and introducing new and higher quality products. The firm had ambitions to grow and to move up in the marketplace by developing new and better products. Nonetheless, developing the appropriate technology was an obstacle that is significant and the management believed they wanted access to additional capital to realize their aims. One alternative that management was considering was to sell out to Danfoss. Alternative 1 uses the (A) instance followed by the (B) instance.

Zhejiang Haili Electronic Technology Co., Ltd (Holip) (A2) Harvard Case Solution & Analysis

The (A) case describes the Danfoss scenario and issues and also describes Holip, its history, its business model and its strategy. Option 2 uses the (A1) and (A2) cases followed by the (B) case. The (A1) instance is nearly identical to the (A) case, but has less information on Holip. The (A2) case is printed from the viewpoint of Holip management and gives comprehensive and complete advice on Holip and the hopes and concerns of the Holip direction team. The advice on Danfoss is quite limited. Much of this added information wasn't understood to Danfoss at the time of the (A1) case. This permits the group to be split into two groups: one seeing the situation through the other seeing the situation through the eyes of the Holip direction team and the eyes of Danfoss. This permits a richer discussion of the two perspectives in class than is possible if the whole class has read the (A) case. Learning objectives: This case offers players the chance to to understand how a pretty typical low cost Chinese player thinks and works, and the challenges that many of them face as competition in their own markets intensifies.

Subjects: Low cost competition; Mergers & acquisitions; Chinese entrepreneurs; Frequency converters; Multinationals competing in China; Pre-acquisition analysis; After acquisition integration; Dual-brand strategy; Danfoss
Settings: China: Frequency converters; 2004 sales €8.5 million; May 2005

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