When the Global Economy is Not Okay For Your Chinese Partner

Tuesday, December 9, 2008 4:24

Over the last few months, the news about closures in China have largely been disconnected from the foreign invested side of China.  Reports of toy factories led the way, but news of steel firms having difficulties, and real estate developers loosing money have yet to result in a big story of how the local side of a foreign firm went under water and the whole partnership was called into question.

This was something I realized when Okay Airlines announced that they were suspending passenger service for a month.  A recent upstart in the private aviation market in China, this was not a news item for many, and it was not directly tied to the recent global financial issues.

Stemming primarily from a shareholder disagreement (see AP article), the interesting impact was that for the first few days it was not clear whether or not their cargo division was going to be impacted.

A division that FedEx has tied itself to to provide next day service to 30-40 cities around China.

Perhaps premature, where this case ma get interesting, this case could provide an interesting case for what happens when the financial issues of a partner could result in significant headaches for foreign partners, and with many firms getting crushed right now globally, it will become more and more likely that we see more cases of this.

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