Pepsi's 'Painful Marriage' in Sichuan
AbstractPepsi had been competing strongly against Coke throughout the world. In 1993, to gain an upper hand in a new market, Pepsi established a bottling plant in cooperation with the local government in Sichuan, an inland province of China. Sichuan Pepsi's business was a big success. The troubles, however, soon started. Sichuan Pepsi refused to follow the policy of allocating separate sales areas for each bottler. It compelled Pepsi China to reduce the price of the concentrate and was eager to produce beverages with new brands to compete with Pepsi. Investigations showed that the management of Sichuan Pepsi took many actions which went against its agreement with Pepsi. The company had transformed from a state-owned enterprise to a company controlled by individuals who formed the top management of Sichuan Pepsi. Both the local government and Pepsi China had lost control of this new cooperative. This case illustrates a special kind of risk in joint ventures in transitional economies: the privatization of the local enterprise partner through some form of management buyout. This risk is further complicated by the changing relationship between the government and enterprises in China, the guanxi-dominated institutional environment and continuous economic reform characterized by 'crossing the river by feeling each stone' which refers to Deng Xiaoping's policy of moving ahead with economic reforms slowly and pragmatically. In order to succeed in such an environment, a firm must be prepared to face the 'crouching tiger, hidden dragon'.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by World Scientific Publishing Co. Pte. Ltd. in its journal Asian Case Research Journal.
Volume (Year): 10 (2006)
Issue (Month): 02 ()
Contact details of provider:
Web page: http://www.worldscinet.com/acrj/acrj.shtml
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tai Tone Lim).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.