White Gold In Benin: Chinese Investment In Cotton
(7 pages of text)
In mid-June 2011, the Chinese president of the China–Benin joint venture Benin Textile Company (Compagnie Béninoise des Textiles, or CBT) was deeply worried about the supply of cotton in Benin. Since 2009, CBT had faced significant challenges in obtaining a reliable cotton supply. In 2010, the company had already placed its cotton orders, but local Beninese cotton producers were unwilling to deliver cotton at the earlier agreed-on price due to the rising market price. CBT was forced to stop production for five months and could not deliver on numerous contracts. The president of CBT was unsure whether to stay in West Africa and if so, how to improve the cotton supply situation. He had four options: maintain the status quo and hope for improvements, withdraw from West Africa, buy cotton contracts from other countries, or invest in cotton production. Which would be the best option for his company?
The case is intended for use in undergraduate and postgraduate courses on international business and strategic management. After completion of the case, students will be able to
- implement the CAGE (cultural, administrative, geographic, and economic dimensions) Distance Framework in an international business environment analysis, including Hofstede's national cultural model and Wells's small-scale technology theory;
- extend global value chain theory to explain the shift and development of the global textile industry;
- integrate SWOT analysis with global value chain theory to analyze CBT's strategy in West Africa; and
- analyze and learn how to manage political risk in foreign direct investment.
Benin, Large, 2011
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