Product details

This is part of a case series. The case describes how Fang Guangming, a serial Chinese entrepreneur, entered the relatively high-technology frequency converters business from the stuffed toy business where he began. Holip started by reverse engineering Japanese products, outsourcing capital intensive parts of the manufacturing process and limiting Holip's production role to final assembly and testing. Holip opted for a sales strategy that worked well with local Chinese customers. Its early success was largely due to fast response time, customised services and low prices. The company suffered losses in its first year, and then quickly became profitable by having a very lean cost structure and introducing new and higher quality products. The company had ambitions to grow and to move up in the market by developing new and better products. However, developing the appropriate technology was a significant barrier and the management felt they needed access to additional capital to achieve their objectives. One option that management was considering was to sell out to Danfoss. The Danfoss-Holip case series can be used in two ways. Option 1 uses the (A) case followed by the (B) case. The (A) case describes the Danfoss situation and issues and also describes Holip, its history, its business model and its strategy. The (B) case describes the acquisition and the developments between 2005 and 2008. Option 2 uses the (A1) and (A2) cases followed by the (B) case. The (A1) case is almost identical to the (A) case, but has less information on Holip. The (A2) case is written from the perspective of Holip management and gives detailed and complete information on Holip and the hopes and concerns of the Holip management team. The information on Danfoss is quite limited. Much of this additional information was not known to Danfoss at the time of the (A1) case. This allows the class to be split into two groups: one seeing the situation through the eyes of Danfoss and the other seeing the situation through the eyes of the Holip management team. This allows a richer discussion of the two perspectives in class than is possible if the whole class has read the (A) case.