Entry and Expansion – Getting it right the first time

Bayer AG of Germany (1994 – Date)

XRG began working with Bayer AG (“Bayer”) when the company had no direct investments in China. XRG assisted Bayer to prepare for entry in to the China market – using the XRG Process – by training over 150 Bayer senior managers and auditing the Bayer corporate and line of business China market entry strategies. Thereafter, joint Bayer-XRG teams assisted in the implementation of these strategies as all five Bayer divisions negotiated direct investments in the China market from 1994-1996.

Today, Greater China has become Bayer’s largest market in Asia and third largest market in the world (after the U.S. and Germany). From step-by-step investment in the early 1990s to large-scale and world-class facilities today, 10 production sites and 18 legal entities are currently operating in this region. Bayer’s integrated production site in Shanghai Chemical Industry Park is the largest investment that Bayer has ever made outside Germany (with a planned total investment of € 1.8 billion). XRG also worked for Bayer on various other consulting assignments in Asia on an ad hoc, non-exclusive basis.

XRG Select Client Reference

Mr. William Valentino is the Vice President – Corporate Social Responsibility for Greater China. As one of the Bayer senior managers trained by XRG in 1994, he is willing to act as a reference for XRG’s capability in transferring XRG process know-how to client project teams, auditing China strategies and assisting in their implementation. He readily acknowledges the accelerated results that the XRG approach affords.

Dr. Norbert Stöhr is Head of the Liaison Office for Greater China with whom XRG worked on a multi-client project focused analyzing and relationship building on China’s emerging Fifth Generation Leaders. He is willing to act as a reference for XRG’s capability in analyzing the complex relationships between national and local organs and the individual leaders therein of importance to the on-going China business of Bayer, while, at the same time, transferring XRG process know-how to client project teams.



Expansion – Intelligence and influence to expand on budget and on time

Reuters plc of the United Kingdom (1998–2001)

In 1997, Reuters decided to expand the scale and scope of corporate information services that it was providing to nonfinancial institutions and companies in China. Consequently, in l998, it set up a China project team to explore market potential. In the preparatory stages, Reuters decided to employ external consultants and sought out a firm that would not only contribute to the strategy development phases of the study work but also one which had proven implementation capabilities, especially in gaining government approvals.

Reuters had first heard about the consultancy services of XRG from one of their previous clients. After meeting with one of their principals and reviewing their hands-on approach to assisting companies in China and their extensive track record, Reuters signed up with XRG to create a team that worked together from 1998 through 2001. The team successfully completed its work on time and under budget. The XRGReuters team conducted extensive, but discreet market research in a number of industrial sectors in a systematic and cost-effective manner. The team then obtained internal as well as PRC government approval to establish Qingniao.net, a new, wholly-owned, Reuters Internet information service provider in China. XRG also assisted in preparing the initial business plan for the start-up enterprise.

XRG Select Client Reference

Ms. Sara Brazendale was Reuter’s New Markets Manager responsible for Reuter’s Qingniao project team in China (1998- 2001). She is willing to act as a reference for XRG’s expansion strategy development and accelerated implementation capability to achieve commercial objectives for clients in China.



Competition – The China Threat – Complex competition and collaboration strategy

NV Bekaert of Belgium (2005-Date)

Customers in more than 120 countries choose to work with Bekaert for the high-tech advanced products, systems and services Bekaert provides based on its 2 core competencies: advanced metal transformation and advanced materials and coatings. Although its main focus is on intermediate products, Bekaert keeps in close touch with end-users so that it can anticipate their needs and offer its customers the solutions that give them a competitive edge in their markets. Bekaert’s workforce of over 19,300 is committed to building win-win relationships with its customers, based on equal partnerships characterized by mutual trust and understanding.

In pursuit of its strategic objective of sustainable profitable growth, Bekaert aims for market and technological leadership and is a major player in its markets worldwide. In 2006 Bekaert achieved combined sales of € 3.2 billion.

Bekaert has experienced significant growth in China in recent years, in almost all of its business platforms and in particular in its steel cord products for tire reinforcement. Today, Bekaert has more than 5,000 employees in China, with production platforms in Jiangyin, Shenyang, Weihai, Suzhou, Wuxi and Shanghai.

Bekaert and XRG

Starting in mid-2005, XRG worked as part of a China project team for the Bekaert Steel Cord Division. The team was tasked with studying and developing a strategy to deal with increasing Chinese competition inside and outside mainland China.

It took the Bekaert-XRG team only five months to complete a comprehensive multilateral relationship development and competition strategy to outmaneuver Bekaert’s main domestic PRC Chinese competitors. In early 2006, the joint Bekaert-XRG team presented its proposed strategy to the Board. This set the course for two to three years of implementation work including:

• A series of strategic alliances and related investments (planned to exceed € 250 million) designed to
  “shift the center of gravity” in Bekaert’s global supply chain towards the China market acquiring a significant
  minority share in the listed company of a major PRC state-owned enterprise strategic partner.

• To date, XRG continues to support on an ad hoc basis the implementation of the Bekaert Steel Cord Division’s
  China strategy.

XRG Select Client Reference

Mr. Geert Roelens, Group Executive Vice President, Advanced Wire Products of NV Bekaert SA led the joint Bekaert-XRG China project team. Mr. Roelens is willing to act as a reference for XRG’s capabilities in the areas of multilateral relationship development and competition strategy development and implementation. He also worked with XRG on a multiclient XRG project focused on analyzing and building relationships with China’s emerging Fifth Generation Leaders. Therefore, he can also act as a reference for XRG’s capability in analyzing the complex relationships between national and local organs, and the individual leaders of importance to Bekaert Steel Cord’s ongoing China business. At the same time, Mr. Roelens can transfer XRG Process know-how to client project teams.


Entry and Expansion – From sales revenue of US$ 300 million to over US$ 1.5 billion

LM Ericsson of Sweden (1991–Date)

XRG began working with LM Ericsson (“Ericsson”) when the company had no direct investments in China, gross China sales revenue of about US$ 300 million (all from direct import sales) and only 20 resident staff in China spread over a few, small, representative offices. Implementing the XRG Process, XRG assisted Ericsson in developing a comprehensive, leapfrogstrategy to enter the China market and provided training in market strategy development and venture negotiation. Twenty-five senior managers and joint Ericsson-XRG teams implemented Ericsson’s entry into the China market over a four-year period from 1991 through 1995.

With XRG’s help in developing a comprehensive, multiphase entry strategy for the China market Ericsson became a major investor in China’s telecommunications revolution. It concluded seven manufacturing and installation joint ventures (one venture with a license for public switch manufacturing), and established one wholly foreign-owned investment holding company with more than one thousand local employees. The public switch manufacturing license was a particularly challenging and rewarding achievement; Ericsson won the license before AT&T and Northern Telecom were able to use American and Canadian government pressure to overturn the PRC State Council decree, “Document #56”, forbidding the granting of any additional approvals other than to the then three existing public switch manufacturing ventures (i.e., Siemens, Shanghai Bell, NEC).
Between 1991 and 1994, Ericsson was an exclusive, first priority XRG retainer client, using in excess of 200 XRG Principal workdays each year. During 1995, XRG worked with Ericsson as a trouble-shooter on an ad hoc, non-exclusive basis, in China and Asia.

By the end of 1995, Ericsson’s China turnover exceeded US$ 1.5 billion (comprising local and imported cellular and public switch equipment sales) and its resident employees in China numbered more than 3000. Between 1990 and late 1995, joint Ericsson-XRG teams used the XRG Process to establish:

1991.09 China Strategy Development and Venture Negotiation Program (Two Divisions), Telefonaktiebolaget LM Ericsson, Stockholm, Sweden

1991.10 China Strategy Audit and Development, Telefonaktiebolaget LM Ericsson, Stockholm, Sweden

1992.09 Nanjing Ericsson Communication Company Limited, JVC between Ericsson Radio Systems AB, Stockholm, Sweden and Nanjing Radio Factory, Jiangsu Province, PRC

1992.12 Guangzhou Ericsson Communication Company Limited, JVC between Ericsson Radio Systems AB, Stockholm,Sweden and Guangzhou Radio Factory, Guangdong Mobile Communication Corporation and Guangdong Machinery Import & Export Corporation, Guangdong Province, PRC

1993.03 Public Telecommunication Switch Manufacturing Technology Transfer Agreement between Ericsson Telecom AB, Stockholm, Sweden and Nanjing Ericsson Communication Company Limited, Jiangsu Province, PRC

1993.04 Guangdong Ericsson Engineering Company Limited, JVC between Ericsson Telecom AB, Stockholm, Sweden and Guangdong Post & Telecommunications Administrative Bureau and Guangdong Machinery Import& Export Corporation, Guangdong Province, PRC

1993.07 Dalian Ericsson Company Limited, JVC between Telefonaktiebolaget LM Ericsson, Stockholm, Sweden and North Eastern Communication Group Company, Liaoning Province, PRC

1994.03 Wholly Foreign Owned PRC National Holding Company, Ericsson China Limited, Beijing, PRC by Telefonaktiebolaget LM Ericsson, Stockholm, Sweden

1994.05 Modern Management Know-How Training Program, Ericsson China Holding Limited, Beijing, PRC

1995.02 Beijing Ericsson Mobile Communications Company Limited, JVC between Telefonaktiebolaget LM Ericsson, Ericsson (China) Company Limited and China National Post And Telecommunications Industry Corporation, Beijing Communication Element Factory, Beijing Telecommunications Equipment Factory and Yung Shing Enterprise Company, Beijing, PRC

XRG Select Client Reference

Mr. Hans Ekström was the President of Ericsson in China (1991- 1994). He is willing to act as a reference for XRG’s capability in developing comprehensive, leap-frog strategies to enter the China market and to assist in their implementation, while, at the same time, transferring XRG process know-how to client project teams. He readily acknowledges the accelerated results that the XRG approach affords.

Mr. Erik Feng is the Executive Vice President/General Manager of 3G Strategies of Ericsson (China) with whom XRG worked on a multi-client XRG project focused analyzing and relationship building on China’s emerging Fifth Generation Leaders. He is willing to act as a reference for XRG’s capability in analyzing the complex relationships between national and local organs and the individual leaders therein of importance to the on-going China business of Ericsson, while, at the same time, transferring XRG process know-how to client project teams.



Dispute, Workout and Exit – Resolving conflict and retrieving funds

International Power plc of the United Kingdom (1998–Date)

National Power plc (“NP”) established a representative office in Beijing in 1994 to develop and invest in large infrastructure power station projects via BOT (build-operate-transfer) and JV (joint venture) selection processes. The company also wanted to invest in a number of small, co-generation plants at the municipal level via JV’s with Chinese partners. The strategy behind investing in the smaller end of the market was that manageable investments could be made quickly and the exposure to operating in the Chinese power market would give the company valuable experience in developing larger projects.

Due to lack of local market expertise, necessary local contacts and manpower resources, NP contracted with a small, Hong Kong-based, development company which specialized in the small end of the Chinese power market. It invested US$ 70 million in four JV projects, which, within a year, ran into difficulties beyond what the company and its Hong Kong based developer could handle.

NP turned to XRG to assist with conflict resolution and restructuring of the projects. The decision was based on the following:

• XRG’s proven track record in assisting and adding value to commercial organizations in China.
• The fact that its principals had direct field experience in managing and restructuring business operations in the region.
• It had ready access to a wide network of key contacts and influence.
• XRG’s practice of integrating with the client’s team to develop strategy and tactics in a transparent fashion inspired confidence.
• Its proprietary methodologies and disciplines would be difficult for a “distressed” team to develop on its own.
• Focus was redirected from contractual and legal conflict resolution to a systematic process of relationship management.
• XRG was able to flexibly adjust its assignment of resources as the NP team gained sufficient confidence to undertake elements
  of the work on its own.

Initially, XRG chose one key project as a focus for a conflict resolution and restructuring exercise. NP had effectively lost control of the project, it hadn’t received any distribution payments for over 18 months and the Chinese partner was diverting all funds for his own use. Within a year of working closely with XRG, the joint NP-XRG workout team had recovered all funds, resolved conflicts and restructured the project giving NP full management control – and the full support of the municipal and provincial governments.

During 2000, NP decided to split up its operations into two mainstream businesses. One company operated in the UK market, and the other, renamed as International Power plc, was to cover global operations. Reviewing its business strategy, International Power decided to focus its efforts in the specific markets for which it was best suited – North America, Europe / Middle East and Australia – and to withdraw from some of the other markets, including China. It sought to divest its assets in a way that would be satisfactory both to China and the company.

With XRG’s assistance, NP established a workout and exit team.
While two of the four projects remained distressed, with no payments having been received for some time, the workout and exit team set out to divest all four projects. Despite the disappointing results of a direct marketing exercise in which no international investors, or power companies expressed any interest in these assets, NP’s local partners engaged in combined project restructuring and purchase negotiations for the projects and all four were eventually sold and the funds successfully repatriated to the UK.

XRG Select Client Reference

Mr. Vince Harris, OBE, a Chartered Engineer, operated with International Power plc (a FTSE 100 Independent Power company headquartered in London) and its predecessors continuously for over 38 years, both in the UK and in Asia. From 1997 to 2003, he was Director China based in Beijing. In 2001 he was concurrently appointed as the Chief Executive of The Hub Power Company Limited, one of Pakistan’s largest listed companies based in Karachi. With a foreign investment of US$ 1.5 billion, it is the country’s largest private sector power project. In September 2003, Mr. Harris was appointed CEO of International Power’s Middle East Region, based in Abu Dhabi, while continuing as CEO of Hub Power in Pakistan. International Power is the largest equity investor in Hub Power, whose other equity investors include Xenel Industries of Saudi Arabia, Mitsui and IHI of Japan and Entergy of the USA. From 2005 to 2008, he worked as the Regional Managing Director Asia of International Power’s Asia Region based in Singapore. Now an independent consultant, Mr. Harris is willing to act as a reference for XRG’s capabilities in the areas of breakthrough strategy development and implementation as well as workout and exit services with which he has extensive experience across Asia.



Dispute, Workout and Entry – The Leap-frog Effect – Multi-million US$ income recovery and market dominance

Eastman Kodak Company of the USA (1992–1994)

XRG worked with a Kodak Consumer Imaging team on implementing a “multilateral relationship development and management dispute resolution plan” involving a major Kodak technology transfer agreement that it had entered into with a Sino-Sino JV company in Xiamen, Fujian Province.

The XRG plan focused on accessing influential contacts at the local, provincial and central government levels to manage the re-negotiation of problematic aspects in the company’s technology transfer agreement.

It took a joint Kodak CI-XRG team about six months to achieve resolution of all outstanding technology transfer issues and a multi-million US dollar income recovery agreement.

Subsequently, XRG trained some 25 managers from five Kodak business units in the XRG Process. XRG also assisted in the study conducted by a Kodak China holding company as well as working with three Kodak divisions to develop initial market entry strategies. The joint ventures are working.

The Kodak CI-XRG team developed a leap-frog China entry strategy for Kodak to take over and consolidate the entire photo materials industry in 1994.

XRG has also worked for Kodak on various other consulting assignments in Asia on an ad hoc, non-exclusive basis:

1992.08 Renegotiation of a technology transfer and licensing contract between Kodak (Export Sales) Limited and Xiamen Fuda Photo Film Co., Fujian Province, PRC

1992.11 China strategy audit and development for three divisions of Kodak (Export Sales) Limited

1994.02 Establishment of an equity joint venture, Kodak Photofinishing Production (Central China) Ltd., between Kodak (Export Sales) Limited and Phoenix Color Photo Service Co. Ltd.

1994.03 Asia Pacific Vision and Strategy Development - Prism Project, Eastman Kodak Company, Professional Imaging Division

1994.06 China Investment Holding Company Strategy Audit and Development, Kodak (Export Sales) Limited

XRG Select Client Reference

Mr. Douglas R. Gerber was responsible for Kodak’s Consumer Imaging business in China (1990-1993) and led the joint Kodak CI-XRG team that re-negotiated the Kodak – Xiamen Fuda technology transfer agreement (1991-1992). He is willing to act as a reference for XRG’s dispute resolution capability in achieving commercial objectives for clients in China. He has also seen the accelerated results, which can be achieved using the XRG Process.



Entry – Many firsts and an innovative strategy

Liberty Mutual Group of the USA (1996–2001)

Liberty Mutual saw China as a potentially large and lucrative market for insurance and investment when it began an Asian expansion program in 1996. With no prior experience in China, the company recognized the need to enlist the assistance of China business consultants to guide it through an opportunity assessment and detailed market entry strategy.

Like many other firms seeking consulting advice in China, Liberty faced the task of selecting a firm that could guide it through the labyrinthine bureaucracy that issues operating licenses, help it train executives and staff on China business, and assist it in venture start-up activities. Liberty agreed with XRG’s approach to cultivating working level contacts as a foundation for actual business operations. Also, Liberty understood the need for top-level contacts rather than base their connections on only one powerful person who would be able to facilitate license approval.

For Liberty, three attributes stood out about XRG; the business track record of the principals, their knowledge of China’s collective decision-making process and a scaleable start-up team. XRG employees worked side-by-side with Liberty employees throughout the process. This allowed Liberty to keep employee costs incremental and helped develop a knowledge base with Liberty’s own team.

XRG helped Liberty’s senior executives gain an in-depth appreciation of the critical organizational factors entailed in building a sustainable business in China – establishing lasting professional contacts and supporters from the working level to the most senior levels of government.

Liberty is now many years into its China market entry project. It received approval for an insurance operating license in 2002. A few notable milestones of Liberty’s experience in China include:

• The first insurance representative office in the municipality of Chongqing.
• A national-level, Liberty public and government relations breakthrough: an annual safety forum created by XRG and
  co-organized with the central government authorities responsible for workplace safety and insurance in China, 
  the China SafeWork Forum.
• An Occupational Safety and Health Research institute in Shanghai and Chongqing.
• A US$ 300 million equity investment in the China petroleum industry.
• A US$ 600 million, joint venture, direct investment fund based in Hong Kong. The Asia Development Bank is a co-investor.

XRG’s process of strategic investigation and client management provided tools to help Liberty appreciate and manage the interface between its China-based operations and its home organization resources while minimizing the impact of strategic organizational flaws and weaknesses. Indirectly, XRG and the China market entry experience had a positive impact on Liberty’s entire corporate strategic planning process.

XRG Select Client Reference

Mr. Alfred E. Bergbauer was Managing Director of Liberty Mutual, Greater China and on the initial market entry team from 1996 to late 1999. After leaving Liberty and China, Mr. Bergbauer worked in the Philippines for two years as COO of Insular General Insurance to restructure their operations. Thereafter, he was CEO of Winterthur’s Shanghai insurance joint venture until June 2002 when he joined Marsh USA, Inc. where he continued to work with the firm’s China clients. In January 2005, Mr. Bergbauer began working as a Senior Vice President at ACE International Advantage in Wilmington, Delaware where he headed the middle market international underwriting operation. In 2006, Mr. Bergbauer rejoined Marsh USA as Senior Vice President. He is willing to act as a reference for XRG’s capabilities in the areas of innovative China market strategy development and execution.


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