June 13, 2007

Lessons from Danone: “Never Leave Your Wingman!”

Filed under: Start-up First Aid — Administrator @ 9:13 am

There is a short article in today’s Wall Street Journal titled “Danone searches for fix in China” by James Areddy discussing the Wahaha Danone conundrum.

What is going on here? How could Danone, a weathered China hand, allow itself to get snarled into a category one China trap generally reserved for newbies? Exxon Valdez, anyone?

Indeed, the answers to these and other mind throttling questions are but a paragraph away. Journal reporter James Areddy writes:

“According to Emmanuel Faber, president of Asia for Danone…in the past, Daonone relied on Mr. Zong to run the business, additng that the French company’s own involvement rarely amounted to more than a helicopter view of the operations.”

Dah!? Someone’s head is going to roll…anyone, anyone? Bueller…Bueller?

Come on guys – China business 101 – Never Leave Your Wingman!

In other words, never leave your JV (or local partner, investee, etc) to their own devices – out of sight is out of mind. China’s an interesting place in that, money/capital, while viewed as an important commodity in other nations, only gets you in the door – it doesn’t ensure you’ll see any return or have rights to information – sadly, you’ve got to earn that.

And by earning it, we mean you’ve got to fight for your right to participate in the business – how is this done? Simple – show up for spot visits, help craft sales and marketing strategies, introduce your local partners to other locals/foreigners, crack open the books every couple of months and perform your own audit, follow the products through their distribution channels and into the hands of the end-users – what every you do make sure you do it in a constructive, unintrusive, visible manner – but do something.

It’s unlikely the Danone case will echo into eternity but it does make you stop, scratch your head, and think…maybe I should be booking a site visit next week!

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