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John, a young MBA graduate, was sent to China to do some investigations by the directorate of Solution Chemicals. Solution Chemicals was a leading global ER (a specific kind of resin and related products) manufacturer with more than 50 years experience, strong production capacity and market competence. However, Solution had fallen behind its competitors in China, a quickly emerging market. One important reason was that Solution did not have its own plant in China. John was expected to find out how to enhance the company''s productivity in China. Because the company was in heavy debt, it could not afford building a new plant. John studied the possibility of doing contract manufacturing, but found it not so promising as he thought. How should he advise the company directorate? This case involves issues in production management, international trade and international investment. It discusses how a multinational company enters a market that is not completely open, and how to rationalise its global production. The case could be used in production management or corporate strategy courses. The teaching note was written by S Jinsi.