Essay about A Rare Success in China - the Celanese Joint Venture

1551 Words May 16th, 2010 7 Pages
Disclaimer: It is against the The Negotiation Experts' principles to offer its services to the tobacco industry. The Celanese case study has been reproduced for the purposes of study only, and is in no way a condonement of the damage the tobacco is causing.
Overview

One of the most closely studied Chinese joint ventures is that involving Celanese Corporation of the United States, a producer of value-added industrial chemicals, and China National Tobacco Corporation (CNTC). The venture produces tow, the fluffy synthetic fiber in cigarette filters.

In 1982, when CNTC decided to increase its production of filter cigarettes, it was on the lookout for international suppliers. Since all tow providers refused to sell their technology to
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William Newman (1992, 72) points out: “Chinese plants...are accustomed to loose standards. Erratic delivery times are common with last-minute flurries of action to meet emergencies.”

By 1992, the Nantong plant was meeting corporate goals and becoming profitable, and so it was expanded; and in 1994, the production of acetate flake (the raw material for tow) was added. Then two additional manufacturing sites for acetate tow, each a separate joint venture with CNTC, were built and started up in 1995—one in Zhuhai, Guangdong province, and one in Kunming, Yunnan province.
Efforts Bear Results

Looking back, Celanese says its joint-venture agreements reflect the learning and the changes that occurred in the wake of the original Nantong joint venture. In 2002, the flake facility in Nantong was expanded to provide flake to Zhuhai and Kunming. A senior Celanese manager said that the performance of the Celanese joint ventures in China had exceeded original investment expectations.

There are few joint ventures in China that have been as successful and learned so much from their own experiences. At the same time, the Chinese laws and regulations affecting joint ventures have seen tremendous changes since 1989, making it easier to do business in China.

In May 2001, after ten years of increasingly successful operations, the two partners announced they had “formed joint work teams to complete a feasibility study on an expansion of

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