According to the Sunday Star Times this morning:
[A] Christchurch political scientist says Fonterra’s lack of understanding of the Chinese political and business environment meant the dairy giant was out of its depth before it had even bought its 43% shareholding in China’s largest dairy company, Sanlu, in late 2005 for $US107m.
That remains one of my nagging concerns about large multinational firms expanding into countries they don’t have a cultural understanding of – too often it appears to be driven by a need to keep expanding and growing rather than a desire to be providing high quality goods or services that would not otherwise be in their hosting country. Fonterra was not short of money or business before it moved to China. Fonterra’s business interests in China were not about New Zealand farmers – it was not New Zealand milk being sold, and clearly as we are learning its work over there was not in the interest of Chinese consumers.
Which is not to say the specific situation would be better or worse without Fonterra there overseeing Sanlu. But too often at a more general level it does seem that large multinationals move in to a country with the specific purpose of buying out, or merging with their competition, growing and expanding, then lack the moral, ethical or cultural compass of their host nation.
Our company is a guest in China. As I read the ongoing news of dieing and ill babies I hope they were good guests who respected and learnt from their hosts, rather than just crass tourists who were trying to replicate their own corner of the world in a foreign land.