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INTERACTION EFFECTS ON PRODUCT DEVELOPMENT NETWORKS IN CHINA
A critical event which took place neither within STI nor CNTC closes the discussion of
the fourth case study. STI’s operations strategy and CNTC strategic marketing plans were
significantly affected by this. In 2003, Golden Filter China shut down. This was a dis-
torting effect from the deteriorating relationship between GF and SEKAP, caused mainly
by a governmental change in the Southern European country. The current GF general
manager of GF was not satisfied, as he notes in an interview, because the government
appointed new Board of Directors, whose relationship ties with the general manager
were weak or not even nurtured. In other words, the GF general manager and the new
members of the Board of Directors did not share common views about business strategy
and future expectations with regards to the relationship with STI. As a result, from 2003
to 2006, the foreign company dropped sales to STI to two containers per year. The above
caused turbulence in STI’s relationship with GF. However, in 2006, a new Board of Di-
rectors was appointed by another new government. The general manager continued to
lead GF and due to previous interaction episodes and existing interpersonal relationship
resources with the PDmanager of STI, there was an increase in the number of containers
delivered to STI; from two in 2006 to fifteen in 2009.
A final finding that should be mentioned was reported in an interview with STI PD
manager. The manager narrated the willingness to resolve a financial issue emerged
from a strengthening EUR currency. The contractual agreement was in USD, but due
to the crisis the USD was depreciated at the time of a new purchase order in 2009.
As a result, STI showed understanding and paid a premium to cover the losses of the
USD. This event strengthened the commitment of both parties into the relationship.
Finally, the GF general manager having established strong interpersonal relationships
in China is now entering into negotiations with factories in other Chinese provinces.
The GF general manager is treated by CNTC as an insider.
Case Study Five
5.5 Formation and Development of Supply Networks in
China: The Case of a Western Textile Manufacturer in China
Endysis Hong Kong (HK) is a foreign-owned textile producer specialised in high-end
children fashion. This case study analyses its manufacturing operating unit; Endy-
sis Hangzhou (HZ), which belongs to Endysis HK and operates in China for almost
two decades. Endysis HZ cooperates with customers and suppliers to design and de-
velop new products and then delivers its end-products to customers in the West. In
2009, Endysis HZ had around fifty Chinese indigenous suppliers and subcontractors,
all of which are based near Zhejiang and Jiangsu Provinces, in South-eastern China.
