Skutis: Negotiating Production in China
(6 pages of text)
In August 2015, a law student in Singapore came up with the idea for his first scooter when he needed a simple and economical mode of transport to get from his apartment to university. The student, who was Norwegian, and his Singaporean partner registered and incorporated Skutis Corporation Pte Ltd (Skutis) within only five days. The Skutis e-scooter emitted no fumes or noise and featured a quick folding design for easy storage. As new entrants in the industry, they felt confident that their combined study skills (law and business) would help them design and produce a more durable and dynamic scooter than those currently available. However, by April 2017, Skutis had already encountered major difficulties dealing with a Chinese manufacturer of its products. After 20 months of experience in the market, the two entrepreneurs were planning their company’s strategy for the future. Having experienced the lows and highs of the Chinese production market, they were searching for ways to make their business more profitable and develop a long-term trustworthy relationship with a reliable manufacturer who would produce their designs.
This case is suitable for graduate and post-graduate business courses that include an international component. Specifically, the case is ideal for use in the fields of conducting business in China, culture in business, negotiation, conducting due diligence on a potential partner and guanxi development. After completion of this case, students will be able to
- identify, analyze, and understand the importance of relationships when involved in business negotiations in China;
- identify methods of conducting due diligence on a potential Chinese partner;
- propose successful methods of negotiating when entering the Chinese market in search of a reliable and quality manufacturer; and
- identify and understand the strategies and mechanisms used to maintain clear and concise communication in a Chinese manufacturing relationship.
Indonesia; Singapore; China, Small, 2017
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