understanding of the Chinese market. They are, therefore, likely to be "maneuvering in
the dark" when it comes to managing the business development processes at the local
Chinese subsidiary.
ness development process, it is crucial to give the subsidiary a strong mandate and a
high degree of autonomy.
ue serving its large global customers as they moved their business activities
to China. From the beginning, the mandate of the Chinese subsidiary was to
sell premium products to its global customers in Asia, and to set up a value
chain enabling them to purchase raw materials for production in Denmark.
Due to the high growth in the local market in China, the subsidiary gradually
received more attention from HQ.
branch. They designed a new business model at their subsidiary in which the
portfolio of products of their China branch should cover the existing custom-
ers in the high-end market and add a new segment of customers in the
mid-market.
grow very fast, 2) the high-end products were quickly copied by other compet-
itors and sold at lower prices and 3) in a long-term perspective, headquarters
expected to benefit from having good relations with strong local mid-market
Chinese customers, who had the potential of moving into Western markets in
the future.
facturing and sourcing setup in China, producing products for their global
market and a distributor mainly focusing on sales to the local region.
Although the management at headquarters saw a great potential for growth
in the Chinese market, they decided to close down manufacturing in China
in 2012. The reason was that the benefit of producing their global products
in China had diminished, due to higher product standardization, automation
and shorter lead-time requirements, so the Chinese sales could not justify the
cost of a local manufacturing site. Furthermore, the management at head-
quarters made it clear that the strategic focus was on the existing developed
countries.
resources and local presence were removed from the business development
project. The effect of these actions was a significant slowdown in the process
of their business development project for the Chinese mid-market.