HBR CASE STUDY

Trouble Paradise by Katherine Xin and Vladimir Pucik

F
The Zhong-Llan Knitting Company joint venture in China is one of the region's shining success stories. So why is generai manager Mike Gravesthinking about pulling the plug on it?

ROM Mike Graves's tall windows, which were draped in red veivet, the view of Shanghai was spectacular: the stately old Western-style buildings, the riot of modem skyscrapers, the familiar needle of the TV tower. But today Mike barely noticed it. Clenching a copy of his Chinese partner's proposal for another acquisition - it would be the company's fourth - he paced the floor and replayed in his mind that morning's unsettling phone call.

He had called his boss. Bill Windier, at
Vladimir Pucik is a professor ofinternational human resources and strategy at the International Institute for Management Development (lMD) in Lausanne, Switzerland. 28

decessors had left before their threeyear assignments were complete, one for family reasons - his wife couldn't adapt to China-and the other for a better job offer (allegedly). Mike, a veteran manager with 20 years of international experience, had lived and worked in Japan, Hong Kong, and Australia before Heartland sent him to Shanghai. Mike's toughest challenge at tbe outset was the language barrier. He wouldn't have survived without Feng Chen's help. It didn't take long for Mike to learn what cha-bu-duo meant: "almost okay." He hated that word! It was baffling to him: Even though his Chinese partners were intelligent and willing to work hard, they weren't exactly obsessed with quality. They cut corners and hardly ever followed operating procedures to
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Trouble in Paradise • H B R CASE S T U D Y

It didn't make sense to him until months later, when Mike heard someone say, "Keeping silent in a group is safer. You won't get in trouble if you don't do anything. But you will get in trouble if you make a mistake. We are experienced under this system, and we know how it works." At any rate, Mike was relieved when the equipment was set up - even though it took two years and outside pressure