Kitchen Best: Ethics When Doing Cross-Boundary Business in Southern China

Course Name: Business Ethics

Case 02: Kitchen Best: Ethics when doing cross-boundary business in Southern China

Submitted By:                 Md. Imran Mahmud

                        ID: 2015-1-95-061

Case Summary:

Kitchen Best Appliances Co. Ltd, a home electrical appliances company was founded by Mr. Chan Dong-hwa. It was a Hong Kong based company which own manufacturing plant was in Guangdong Province. Chan handed over authorities to his sun Henry in 2008. Then Henry set up a target to make the revenue double within next four year. But he faced some issues which was uncomfortable for him to control. He faced dilemma for what course of action he should take to solve the issues.

Light manufacturing & small and medium sized enterprises contributed a lot for the Hong Kong’s industrialization in the 1950s. The competitive advantages of SMEs led to flourish gradually. At the end of 2009, SMEs have grabbed Hong Kong’s business units of territory which also contributed in the employment of the country also. In 1978, after Chinese Government adopted an open door policy, then most of the SMEs relocated their manufacturing operations near to Guangdong. Wages and operating costs were cheaper there. Many Hong Kong Businessmen transformed themselves from manufacturing to traders or service providers in the 1980s. Among the light manufacturing industries, Hong Kong SMEs focused on the electrical appliances. The export quantity of the electrical appliances was also remarkable in 2009. The Hong Kong industry mostly produced small appliances with portfolio of other appliances and exported different places of US & EU. The US & EU maintained their different standards and requirements.

The cooking appliances were expected to be the most lucrative segments among global kitchen appliances industry in 2013. China held a strong position on that time on not only as a one of the world’s largest household appliances markets but also as one of the biggest exporters. Chinese appliance manufactures were expected to ship more than 250 million units in 2013.

Chan Dong-hwa founded Kitchen Best Appliance Co. Ltd in 1980. It was specialized in manufacturing and marketing of kitchen appliances, especially for cooking. The factory was located across the border of Foshan, Guangdong. Chan closely monitored all the business issues, all the important decision was taken by his approval. He maintained close relationship with his customers. By 2003, Chan expanded the business with a drastically increase in employee number from 80-1500. His wife involved their son Henry Chan who was graduated from American University. He previously worked as market executive in different electrical and electronic appliances company. Henry was a very ambitious guy with an aim to expand company’s position in the European and American Markets. He officially took over the business as Chief Executive in 2012 with an aim to make the company’s revenue double within 2012.