The CEIBS Real Situation Learning Method - Volume 3, 2018
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Volume 3, 2018
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Page 04
The CEIBS
Real Situation
Learning Method ™
IN THIS ISSUE
We kept hearing good things about CEIBS’ Voice sections which profile, respectively, Wang
innovative new approach to the case study method Hongjie (EMBA 2006/HEMBA 2018) and William
of teaching, so we decided to dig deeper. The result: Yan (MBA 2018). Both are inspirational tales of
this issue’s Cover Story on the trademarked Real what can be achieved when you truly believe in
Situation Learning Method. As Dean Ding Yuan puts what you do.
it, RSLM is “case teaching plus”. And it’s been getting We tap into our expert faculty for the
high marks from students, faculty and corporates Knowledge section, with Prof Juan Fernandez’
alike. We explain how and why it works and give a look at the digital revolution and a full-length
sample of two cases RSLM has brought to life. Feature based on an on-campus lecture on
There has also been a lot of buzz around TAL, leadership by CEIBS Distinguished Professor
a company guided by its mission to “advance and former Prime Minister of France Jean-Pierre
education through technology and the internet”. Raffarin. There is also a review of CEIBS Honorary
In an exclusive interview with Founder Zhang President (European) Pedro Nueno’s book, The
Bangxin (EMBA 2007), we get the inside scoop 2020 Board.
on what’s next for TAL and the overall future Then there’s the usual round-up of news
of educational models in an increasingly tech- from our 5 campuses across the globe as well as a
heavy industry. Be sure to have a look at the brand new section of the magazine, the Employee
full interview in our CEO Talk section of the Interview. This is where you get to meet CEIBS
magazine. employees “who have contributed greatly to the
We also bring you CEIBS alumni feature school during their years of service”.
stories in the Entrepreneurial Spirit and Alumni It’s a jam-packed issue. Enjoy!
Snow Zhou Charmaine N. Clarke
Editor-in-chief Editor-in-chief
Assistant President, CEIBS Assistant Director, CEIBS Marcom
Anywhere, anytime.
WeChat Online
contentS
02
theLINK l Contents Volume 3, 2018
Cover Story
04 Keeping it Real 08
06 Real Situation Learning Method: Case teaching gets an upgrade
10 Drifting Deeper, Exploring Wider: CEIBS MBA Programme Director
Prof Juan Fernandez on the Real Situation Learning Method
14 Transforming Zotter’s Chocolate Theatre into a Classroom
20 Victorinox: Built to Last
Employee Interview
26 Conscientiousness is a Culture
32
37
Finding Joy on the Job
Savouring Each Victory
27
CEIBS Around the World
42 China’s Service Sector Will be Major Focus of Reform &
Opening-up; Executive Forums in Beijing; Shenzhen Campus
Hosts Annual HR Forum
44 RSLM: Vital to CEIBS Excellence Exchange Programmes
46 Connectivity and Beyond
~ Stories from CEIBS Africa AMP/ODP Shanghai Module
48
Feature
48 Raffarin: Similarities and differences between Chinese,
French, and US leadership
52 The 2020 Board: The Future of Company Boards
CEO Talk
54 Zhang Bangxin: Visionary in the Field of Education
Entrepreneurial Spirit 57
58 Wang Hongjie: Back to CEIBS
CEIBS Knowledge
62 China’s Digital Revolution
Alumni Voice
70 An Atypical MBA Student’s Self-Transformation
theLINK Volume 3 , 2018
contents
03
theLINK l Contents Volume 3, 2018
Briefing
76 CEIBS Global EMBA is #5 in Financial Times Ranking; CEIBS 76
Says Thank You to Pedro Nueno, Welcomes Dipak Jain; Wu
Jinglian Appointed as CEIBS Honorary Professor; Former
French PM Dominique de Villepin Headlines CEIBS CMO
Summit; CEIBS Board Member Presented with Prestigious
Magnolia Award; Highlights from our Europe Forums.
Scene@CEIBS
86 Pascal Lamy Joins CEIBS Faculty; Prof Sheng Songcheng
Appointed Counsellor of Shanghai Municipal People’s
Government; CEIBS Teams Dominate 2018 CEEMAN and
86
Emerald Case Writing Competition; Prof Oliver Rui Among
WFC Best Papers Award Winners…
Corporate Sponsor
92 Foundation News
PUBLISHER: CEIBS CONTACT US: SHENZHEN CAMPUS
TEL: +86-21-28905501 Suite 10A, Taihua Wutong Industrial Park
EDITORS-IN-CHIEF: Snow Zhou, Charmaine N. Clarke FAX: +86-21-28905273 Gushu Development Zone
MANAGING EDITOR: Lei Na EMAIL: alumnimagazine@ceibs.edu Shenzhen, 518126, P.R.C.
CONTRIBUTING EDITOR: Du Qian Tel: +86-755-36995111
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REPORTING & TRANSLATION: 699 Hongfeng Road, Pudong E-mail: szo@ceibs.edu
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Fax: +86-21-28905678 Zurich Institute of Business Education
ART EDITOR: Mickey Zhou & Saya Wang @ Snap Printing Website: www.ceibs.edu Horgen, Switzerland
Phone +41 44 728 99 44
PHOTO EDITOR: Juana Zhou BEIJING CAMPUS Fax +41 44 728 99 45
Building 20, Zhongguancun Software Park Email: info@ceibs.ch
COVER DESIGNER: Marius Ziubrys 8 Dongbeiwang West Road, Haidian District
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Published by CEIBS. The authors' views expressed in this publication do not necessarily reflect the views of our editors or of CEIBS.
Copyright 2018 © by CEIBS. All rights reserved.
theLINK Volume 3, 2018
cover story
04
Keeping it Real
E
ver since it was rolled out, first in Europe for executives on
short term study and now being applied to classes inside
China, CEIBS Real Situation Learning Method (RSLM) has
been a huge hit! The students love it because it makes learning a lot
more relevant to real life, the faculty love it because it keeps their
material fresh, and the companies that are the basis of the cases
discussed are big fans as it presents them with an opportunity to
have fresh eyes assess their operations and offer solutions to real
life challenges they may be facing.
In this Cover Story we take a look at how the RSLM began, how
the initiative has been embraced and continues to grow, and we
also provide two of the cases used during this highly interactive
learning experience. Read on for:
• Real Situation Learning Method: Case teaching gets an upgrade
• Drifting Deeper, Exploring Wider: CEIBS MBA Programme
Director Prof Juan Fernandez on the Real Situation Learning
Method
• Transforming Zotter’s Chocolate Theatre into a Classroom
• Victorinox: Built to Last.
theLINK Volume 3, 2018
cover story
05
Case studies come alive with RSLM. Celebration
after a few laps around the track.
theLINK Volume 3, 2018
cover story
06
Real Situation Learning Method:
Case teaching gets an upgrade
By Charmaine N Clarke
W
hen CEIBS Vice President always dig out interesting insights; and
& Dean Ding Yuan visits then you can see the suitability for our
a company or factor y students and our courses. You have to
floor, he often sees a lot more than the be very open-minded to do that. It’s
average person does. Where others may difficult,” he says. In fact, for him, a
just see swanky offices or a noisy, messy watch company might be turned into
workspace, he sees the potential for case an ideal classroom for discussing the
studies that can cover multiple topics financial hedging strategy for volatile
taught by various CEIBS programmes. precious metal costs or exchange
risks for non-Swiss Franc sales; or
“Yo u c a n l o o k a t a Sw i s s w a tc h into the perfect learning ground for
company as just a watch company. But brand acquisition and multi-brand
if you take a different angle, you can management strategy.
theLINK Volume 3, 2018
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07
We’re in his office, and he’s explaining – benefit. Instead of simply sharing Participating companies that open
CEIBS’ trademarked Real Situation pre-packaged company presentations, their doors to CEIBS students and
Learning Method (RSLM). It’s a high- executives are faced with questions s p e a k f r a n k l y w i t h t h e s c h o o l ’s
end approach to teaching, a bit of a from fully engaged students who have faculty about their operations benefit
luxury good that’s offered in limited not only read the case about their firm from having fresh eyes look at their
quantities – and there are str ict but have also seen their organisation organisations. As part of class projects
guidelines that have to be followed in action through a company visit. completed by students with diverse
before a project can earn the RSLM Students are not just wading through backgrounds and nationalities, there
label. Dean Ding sums it up as “case pages upon pages of voluminous may be useful solutions to challenges
teaching plus”, an “upgraded” version case studies filled with dry, abstract companies are facing; their cases may
of the t r aditional Har vard-st y le data. Instead, they have a chance to even be featured in top-of-the-line
approach that’s enhanced by a theory- ask questions such as those posed to academic journals. “We recognise
driven, focused company visit where the CEO of Victorinox, the fourth that, for the companies who offer us
students engage directly with the generation head of a company best this opportunity for learning, there
firm’s top executives. known for producing Swiss army needs to be something in it for them
knives, “What was the rationale behind in return,” says CEIBS Associate Dean
Without giving away too many trade the decision to run the company for Europe, Professor Katherine Xin.
secrets, the essence of CEIBS’ unique through a Foundation that holds 90% “Maybe they are interested in the
RSLM is that it makes case studies of its shares? How does your father China market, or they have business
come alive. There is a structured treat you now that you've taken over in China already. Or maybe they
approach to designing the entire the company? How do you grade just want to get feedback and have a
experience to ensure that both sides – yourself as a leader?” The discussion discussion with a group of Chinese
students & faculty as well as companies was on corporate governance. executives. That’s a very nice return
theLINK Volume 3, 2018
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08
on their offer of opening their doors “We have pretty high demands of guidelines on what students can and
to us, spending time with us, sharing these companies, because we need cannot do during company visits.
their insights with us.” to write the case. It’s not just a study Participants are carefully selected and
tour. It’s not a touristic thing. It’s very companies can screen them to avoid
Getting a foot in the door content driven,” explains Prof Xin. conflicts of interest. Companies are
“When writing a case, we need to also integrally involved in designing
In the early days, RSLM was only focus on an issue that is of interest to the case study, working closely with
offered to participants of CEIBS’ our students or course participants. CEIBS’ academic staff throughout the
European Exchange of Excellence And the executives need to be willing process.
programme, a continuous learning to spend time with us to answer the
opportunity for senior executives questions and take a deep dive into the With the RSLM’s success in Europe,
who had likely already completed at issues. So all those tasks are not that and an increasing number of CEIBS
least one CEIBS degree programme. easy to do when we just knock on the faculty eager to try the new approach,
It began w ith v isits to European doors of some of the best companies it was soon expanded to include
companies like Victorinox and, back in the industry.” Chinese companies and offered to
then, it took a fair bit of convincing degree programme students. Subject
for some companies to open their It helps that CEIBS is a business areas have so far included topics
doors to a contingent of Chinese school, so that eases some of the fear such as family heritage, supply chain,
business executives and their professor that there is a danger of sharing too industry 4.0, strategy and more – all
who wanted a lot more than just the much technology, for example. It within the framework of ensuring
standard look around their office. helps even more that CEIBS has strict that the quality and integrity of the
“It’s not just a
study tour. It’s
not a touristic
thing. It’s very
content driven.”
theLINK Volume 3, 2018cover story
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RSLM is maintained. Faculty who I am sure the students enjoyed it too. Another memorable RSLM
want to do a RSLM course need to What better way to learn than in a experience took Professor of
submit a proposal for consideration. chocolate theatre!” he said a few days Marketing and Associate Dean
If approved, they have to implement after the visit. (Executive Education Programme)
the project within clearly defined Wang Gao and his students to the
guidelines. None of this has dampened Other RSLM projects inside China race track. In between the serious
their interest. One of the reasons the have included working with Ningbo- business of going through the case
RSLM is so popular among them is based Joyson Electronics, one of study on a car racing company run
because they can also teach the cases the top component suppliers for by a CEIBS alumnus, participants
they develop for RSLM as part of global automotive manufacturers. donned r acing gear and to ok to
their normal classes. And though this Associate Professor of Strategy Chen t h e t r a c k . It w a s a l l c a p p e d o f f
doesn't include company visits and Weir u and a g roup of 60 CEIBS with winners being drenched with
meeting with executives, it boosts the alumni and entrepreneurs visited the champagne as they proudly took the
school’s overall teaching standards as company’s headquarters for a session podium.
it provides the advantage of having that focused on the significant
access to fresh content, across a wide impact that globalisation is having Fu n m om en t s l i ke t h e s e a re t h e
range of industries in Europe and on corporate strateg ic planning , p er fec t complement to the hard
Asia. organisational structure, culture work that goes on behind the scenes
a n d t h e v a lu e ch a i n . “We s p o ke – both by the companies and CEIBS
In fact sometimes companies have with senior executives from Joyson faculty. “Our faculty are developing,
links to both locations. Electronics and learned about their through this process, as thought
successes and failures, and we were leaders in different areas,” says Prof
There was one memorable company inspired by their stories. We also had Xin. “And it certainly helps to build
visit/lecture, for example, in an opportunity to discuss how to our reputation as a school that is on
the Zotter Chocolate Theat re in combine theory and practice,” said the cutting edge. It also shows that
S h a n g h a i . Zo t te r i s a n Au s t r i a n participant Jin Li from GEMBA 2015 we are really a school with a global
brand that worked with a Chinese after the course. At the time, she was mindset and global practices.” She
partner – CEIBS alumna Amy Fang working on an acquisition in a large hopes RSLM will eventually cover
– to successfully launch in Shanghai. privately-owned company, and she topics such as blockchain, engaging
For his first ever RSLM experience, was able to use aspects of what she experts, innovators, executives from
Associate Professor of International learned during the RSLM course in around the globe. “I also hope we
B u s i n e s s a n d S t r a te g y S h a m e e n successfully executing that project. can do more RSLM projects in China
Prashantham lectured not from a that see us reciprocate and open
typical classroom but from the Zotter Company executives also spoke of our doors to engage international
auditorium. He was thrilled with the the benefits of their inter action participants who would like to visit
experience of lecturing from inside with the group. “Their suggestions Chinese companies, to understand
the very company whose case he had provided great inspiration for our Ch i n a ,” a d d s Pro f Xi n . “We c a n
co-authored and was sharing with f u t u re p l a n s ,” s a i d Joy s o n’s H R be on the receiving side, helping
students from CEIBS Global EMBA Director Crystal Zhao who joined to facilitate a conversation – with
Zu r i c h co h o r t . “ T h e R S L M i s a the discussion along with company global participants – about China.
wonderful teaching tool, and using it CFO and her GEMBA 2015 classmate With RSLM we can be continuously
was a fantastic experience for me, and Lucy Lu. innovative!”
theLINK Volume 3, 2018cover story
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Drifting Deeper, Exploring Wider
CEIBS MBA Programme Director Prof Juan Fernandez on the Real Situation Learning Method
By Lei Na
I
n recent years, the CEIBS MBA programme has widely
applied the school’s exclusive innovation – the Real Situation
Learning Method (RSLM) – to its courses and, in the
process, it has borne remarkable fruit. TheLINK interviewed MBA
Programme Director Professor Juan Antonio Fernandez about
how the school is using the method to take CEIBS’ “China Depth”
and “Global Breadth” to an even higher level in the context of
fusing Chinese and Western cultures.
theLINK Volume 3, 2018cover story
11
Read on for the full interview: but can instead learn at home. How can cases about Shenzhen’s electronics
we compete with them? I think what manufacturing hub and marketplace,
TheLINK: Can you introduce they cannot provide is the real world Huaqiangbei; Shenzhen-based AI and
some of the curriculum experience. voice industry innovator, eMeet; and
innovations brought about by venture capital firm, Sharecapital. The
the CEIBS MBA programme’s The RSLM was first put forward by name of the course is “From Copycat
application of the Real Situation CEIBS Vice President and Dean Prof to Innovation” and it focuses on the
Learning Method (RSLM)? Yuan Ding. When I came to understand journey of Shenzhen’s emergence as
how it worked, I realised it aligned very China’s innovation hub. As part of the
There are two things that we’ve been well with the strategy of the CEIBS course, students travelled to Shenzhen,
doing: first, we’re paying close attention MBA programme. In a typical MBA visited the companies, studied the cases,
to new technologies, in particular, class, students sit in a classroom and and met with local people. This kind
the digital revolution, because it will discuss the case. Although the RSLM of experience will never be available in
have a big impact on various modes also builds itself on cases, it brings the classroom or online and it is typical
of business operations and marketing; students into cases, into the companies of the CEIBS Real Situation Learning
second, we’re focusing on experience. involved, instead of adding cases into Method.
At present, online MBAs are becoming classes.
an increasingly powerful rival of Prof Jean Lee, Director of CEIBS Centre
traditional MBA programmes, thanks Prof Zhang Yu was among the first for Family Heritage, has spent years
to their competitive tuition fees and professors to adopt the reality-based studying the field of family heritage.
the flexibility they provide to their teaching method. He developed three She has developed cases about Chinese
students who don't need to leave work, cases based in Shenzhen; specifically, textiles manufacturer, Huamao Group
“It brings students
into cases, into
the companies
involved, instead of
adding cases into
classes.”
theLINK Volume 3, 2018cover story
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“Real Situation
Learning Method
is highly effective
and helps us stand
out from the
online MBAs
and MBA
programmes
of other
schools.”
and kitchen appliance manufacturer, Chain System”. The course is mainly Nanjing and Kunshan. The course will
Fotile Group. Her reality-based course carried out in the classroom, but also also be 100% reality-based.
is a mixture of two days of teaching has arranged visits to the Shanghai
at our Shanghai Campus and another First People's Hospital. Professors have to put in a lot of effort
two days spent visiting the companies in developing cases for courses, and
in Ningbo, where students have the You may have already noticed that the MBA Office staff have to devote
opportunity to communicate and there are different proportions of themselves to organising the visits. But
discuss with company founders and reality-based activities in each course, it all pays off, because the Real Situation
their successors. varying from 100% to 50% to 20%. Learning Method is highly effective
This October, CEIBS will launch a and helps us stand out from the online
Prof John Cai also teaches a course course called “Globalisation of Chinese MBAs and MBA programmes of other
about medical innovation. The case he Companies”. Under the instruction schools.
uses is titled “Evolving from Traditional of Professors Shameen Prashantham
Business to Ser vice Innovation – and Ginkgo Bai, students will learn TheLINK: CEIBS’ MBA students
Shanghai Pharma’s Smart Supply about globalised Chinese enterprises in make up a very international
theLINK Volume 3, 2018cover story
13
a n d d i v e r s e c o m m u n i t y. business and society. programme, students have to head for
Everyone has their own unique the Gobi Desert and finish a walk of
cultural background. Can the As part of the Real Situation Learning 88km within three days. This is a very
Real Situation Learning Method Method, students have the opportunity arduous challenge.
cater to the different needs of to visit the places where new ideas and
Chinese and foreign students? new technologies were born, and this Leadership also incorporates
is an important part of the experience. acting. Actors are usually good at
Some RSLM courses are designed We also connect China with the rest of communication, emotional expression,
for foreign students to get a better the world through these courses. and commanding attention, you can
understanding of Chinese companies learn a lot from them.
undergoing globalisation; in fact, the Recently, we have started another
companies are actually their potential course in Jinhua in Zhejiang Province. As you can see, these courses also
future employers. Other courses are of Students travel to Jinhua where they eat involve learning based on experience,
equal benefit for Chinese and foreign and live together with the local people. though there is no case involved. I
students. Through the courses, foreign This is not only about business, but often ask people the question, “How do
students come to better understand also about experience. It gives students you learn to swim?” You have to jump
China’s management practices, and the opportunity to understand another into the pool and swallow some of the
Chinese students get a deeper grasp side of China. Shanghai, Beijing, and water. You can’t just stand on the bank
of China’s innovation. The Shenzhen Shenzhen represent the modern and and learn about it by reading a book.
module is a good example in this open side of China, but in rural areas,
regard. there is a vaster version of China where TheLINK: Why has the CEIBS
there are other people with different MBA programme had so
CEIBS offers “China Depth, Global values. The course makes students much success in implementing
Breadth”. Our local courses deliver reflect on their own lives. the Real Situation Learning
“ C h i n a D e p t h”. A s f o r “ G l o b a l Method?
Breadth”, we provide Chinese students The Jinhua module is a project focused
with various overseas study trips to on developing internal leadership. The Real Situation Learning Method
help them understand how vast the If you want to lead others, you must is an excellent idea. We are grateful to
world is. So far we have six overseas lead yourself. You must know yourself the professors who have taken pains
modules. – your advantages and disadvantages to develop the courses and cases. In
– you must reflect on your life and addition, this would not have been
To d a t e , s t u d e n t s h a v e l e a r n e d find out what is most important for accomplished without our alumni,
about innovation in Israel, socially you. These things will have an impact who are among our most precious
responsible leadership in Malaysia, on your leadership style, because assets. They keep in contact with the
entrepreneurship and innovation leadership starts from the core ability school and share their knowledge,
in Japan, manufacturing excellence of self-understanding. and their companies offer students
in Germany and Switzerland, and visiting and learning opportunities. We
entrepreneurship ecosystems and Leadership is also about making are very grateful to our alumni who
networks in the US. Next year, we decisions under various sets of are participating in RSLM and look
w ill launch a new Silicon Valle y circumstances, and this is something forward to working with them and
module featuring topics around new that students learn about in our others in the years ahead.
technologies and their impact on Gobi programme. As part of this
theLINK Volume 3, 2018cover story
14
Transforming Zotter’s Chocolate
Theatre into a Classroom
O
ne memorable example 365 different kinds of chocolates
o f h ow t h e C E I B S Re a l from Zotter China. Julia Zotter, the
Situation Learning Method company’s representative in China,
makes cases come alive is a Global credits much of their success to
EMBA class visit to Zotter’s Chocolate their excellent Chinese partner, Amy
Theatre in Shanghai. Students Fang (CEIBS EMBA 2010). But the
discussed the case with its co-author company’s story began long before that.
and company executives. They also
had a chance to sample Zotter’s wide In 1987, Josef and his wife Ulrike
range of products. Read on for excerpts Zotter opened the Zotter Konditorei
from the case, followed by a Q&A confectioners in Graz, the second
with co-author Professor Shameen largest city in Austria. The company’s
Prashantham. rapid growth meant it was not difficult
for Josef to get bank loans to fund
In March 2014, Zotter Chocolate’s further expansion. In 1996, he opened
brand-new Chocolate Theatre opened two more pastry shops in Graz and
on the banks of the city’s Huangpu another one in a different city. After
River and customers could buy about temporary bankruptcy, in 1999, Josef
theLINK Volume 3, 2018cover story
15
built a chocolate factory in the barn and Biotechnology at the University of commitment to organic products.
next to his parents’ house in the small Natural Resources and Life Science in After doing more homework on the
village of Bergl. By 2016, Zotter was Vienna. chocolate industry – including visits to
producing over 400 different varieties chocolate shops in Japan, the UK, and
of chocolate. On the cultural side, she was a the US – Fang and Messner decided to
fluent speaker of multiple languages, help Zotter enter the Chinese market.
Fo r t h e Z o t te r Fa m i l y, t h e co re including Chinese. She explained, “We
company value was having fun with knew we wouldn’t sell a lot of chocolate “We need to have a good understanding
chocolate. Zotter Chocolate was one of at first, but we understo o d that of our Chinese customers,” said Julia.
Europe’s few manufacturers with in- Shanghai was a place for entertainment “Chocolates to them are like green tea
house production “from cocoa beans and experiencing new things.” to us – that is, not very familiar.” From
to chocolate bars (bean-to-bar).” “This the beginning, they decided to build a
gave us better control over the quality Zotter China Chocolate Theatre in Shanghai, to raise
of our products,” said Josef. In 2007, awareness among Chinese customers.
Zotter also built a Chocolate Theatre, In 2011, Josef began looking for
for people to experience the chocolate potential business partners in China. In December 2012, Zotter Organic
production process from beginning to He met an Austrian businessman Chocolate Shanghai Ltd. was formally
end, and to get a better understanding with a company in Beijing that sold registered, with joint investment from
of the company’s core values, such as its organic products online. However, Zotter and Cedar Essentials.
commitment to organic products and since Shanghai was perceived to have
fair trade. a more international outlook, he Exploring the Market
instead introduced Josef to Shanghai-
Going Global: US or China? based Amy Fang and Rudi Messner, At the end of March 2014, Zotter’s
who had gained a good reputation brand-new Chocolate Theatre opened
Josef ’s ambition was to keep innovating among companies in the organic food on the banks of the Huangpu River
and expanding the chocolate business, business. in Shanghai, built in a 100-year-
but he also had other international old former clothing factory. Zotter
markets in mind. Recognising the Fang and Messner ran their ow n combined its unique style with the
prohibitively intense competition in the company in Shanghai, Cedar Essentials beauty of an old brick-stone building.
European market, this left two main Co. Ltd., which imported natural and The theatre was 2,400 square metres in
options: the US (also competitive, but organic products such as cosmetics and size and celebrated the art of Austrian
a large market) and China, a nascent detergents. “After three years, we were chocolate making. It provided visitors
market with hardly any chocolate probably the number one company with an opportunity to understand the
consumption. In the end, a decisive for organic detergents in China,” Fang chocolate manufacturing process, try
factor in deciding to pursue the said, “We wanted to devote the rest of freshly roasted cocoa beans, taste more
Chinese market was the expertise of his our lives to supporting organic trade, than 200 types of chocolate, and take a
eldest daughter, Julia. which is good for society and the rest in its Viennese-style coffee bar.
environment.”
On the technical side, Julia had a Julia observed: “We came to a market
Grand Diploma in patisserie and When she was approached about like this as a non-chocolate business in
cuisine from a renowned culinary arts partnering with Zotter Chocolate, Fang a way. We came to raise awareness and
institute and had studied Food Science was impressed by Zotter’s genuine show people what chocolate is, with an
theLINK Volume 3, 2018cover story
16
“Zotter made
multiple
innovations
for the China
market.”
experience-based concept. The theatre chocolate market, and exper ts food (such as nuts), and avoid being
can help them to experience and optimistic about growth were extravagant with chocolate. There was
understand chocolate.” predicting that it would become also the question of whether Chinese
a RMB40 billion market by customers would understand the avant-
Zotter made multiple innovations for 2020. However, from 2015, many garde Zotter Chocolate’s culture.
the China market. One of the most international chocolate producers
important ones was the DIY (do it experienced a decline in sales revenue When it came to persuading Chinese
yourself ) Chocolate Workshop. The as the Chinese economy witnessed a customers, people were always the
company also introduced China- slowdown. By 2016, total retail sales of key. Whenever Julia talked about the
specific packaging for special occasions. chocolate in the Chinese market had top managers in Zotter China, she
Another China-specific innovation was declined by 4%. always said how proud she was to
chocolate mooncakes which included have Fang and Messner on board. She
four flavours: traditional chocolate and In addition to these changes in the gave Messner the position of General
three hand-scooped varieties. market, Zotter also had other challenges Manager in November 2015, while Fang
to overcome. Worried about their health became the Deputy General Manager
The period from 2012 to 2014 saw and weight, many Chinese customers and Julia herself handled the technical
d o u b l e - d i g i t g row t h i n C h i n a’s preferred to eat organic and natural side and product development.
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Life Lessons from the Zotter Case:
Q&A with Prof Shameen Prashantham
This case is a great example of what interfacing effectively with regulatory S.P.: Actually the Zotters may not be
it’s like for a European company to bodies and executing on the China the best textbook example of making
master the China market. What are strategy. strategic plans, since many of their
some of the lessons here that could decisions are intuitive! But in any
be helpful for other foreign firms What are the lessons for Chinese case, compar ing entrepreneur ial
looking to break into the China looking to par tner w ith foreig n opportunities essentially comes down
market? firms entering the China market? to three factors: economic viability,
Do you behave differently before the feasibility to execute, and personal
Prof Shameen Prashantham (S.P.): foreign firm has entered and after it goals. In this case, my own view is
First, I think that it’s impor tant has already established a presence in that both the US and China offered
to be clear about what the value China? attractive opportunities in terms
proposition for the contemporary of viability and feasibility; personal
Ch i n e s e m a r ke t i s . Wi t h o ut a S.P.: Pre- and post-entry are sub- passion might have tipped the balance
compelling reason to buy, why would processes in a broader process of in favour of China. It’s important to
customers in another market bother internationalisation. The difference is recognise the importance of personal
to select your product? Second, it that before you enter you’re making interests, especially in smaller family
must be recognised that even though hy pothetical decisions, and once businesses – but also to have the
one talks about entering the “China you’ve entered you’re making decisions maturity to assess if these personal
mar ket”, in realit y the first step based on reality. So in making plans it interests can be aligned with the
involves a small part of that market. is important to undertake competent success of the business.
Figuring out the right beachhead external and internal analyses, to assess
is important. For Zotter, Shanghai the power and interest of stakeholders, The Zotter case demonstrates the
s e e m e d t h e o bv i o u s ch o i ce . Fo r and to come up with an appropriate value of having an excellent Chinese
others, it might be sensible to start off market entry strategy. After entering partner. What are some of the traits
in a tier-two or tier-three city, where the market, it may be impor tant European firms should look for when
operations (and mistakes) may be less to improvise and deal calmly with selecting Chinese partners?
costly. Third, identifying a reliable unexpected setbacks.
partner is important. Josef Zotter’s S.P.: Entering any international market
instinct to reach out to a fellow-Swiss When crafting their expansion plans, requires access to new knowledge
person based in China is a natural Zotter narrowed down their options and networks. For a smaller foreign
one. But while such ties are a great to either the US or China. What company, developing the requisite
start, it may be important to build factors are most important when capabilities is often an expensive and
on those to forge other relationships making such a choice? Are there difficult process, and so a competent
with relative strangers. In so doing it’s any lessons here for Chinese firms a n d t r u s t wor t hy p a r t n e r c a n b e
important to find a partner who can trying to decide on locations for their valuable; that’s what Fang was to the
help with deciphering market needs, overseas expansion? Zotters. Her deep understanding of
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19
local conditions and access to vital characteristic. Given that chocolate there, the partnership may crumble
networks made it feasible to convert the consumption in China is relatively under pressure. By the same token
Zotters’ dream of creating a chocolate low, it would have been harder for the strengths need to be there too,
theatre in Shanghai into a reality. Zotter to find a chocolate specialist since in the first instance the foreign
as a partner, and so working with an company will likely not have sufficient
Fa n g h a d n o e x p e r i e n c e i n t h e organic product specialist was probably understanding of local customers,
chocolate business, yet she was a sensible option. In the partnership, regulations, and operational challenges.
enthused by the prospect of Fang sensibly relied on the Zotters for Second, partners should know their
partnering with Zotter. How can the expertise on chocolate, while herself limitations. For instance, their strengths
Ch i n e s e n a t i on a l s w h o w a n t to providing the China expertise. may be limited to certain types of
contribute to the success of foreign products or regional locations. It’s
firms operating in China prepare Based on Fang’s success in this case, important to play to one’s strengths and
themselves for such a role? what are a few best practices that not overstretch. Third, partners must
will help Chinese business executives recognise the importance of constant
S.P.: Fang was passionate ab out better understand and collaborate learning – from each other, about the
something – organic products – and with Europeans? partnering process, and by constantly
saw a great opportunity to work with reviewing current strategy, and making
Zotter as part of this broader mission. S.P.: First, effective partners have strategic changes with flexibility and
Thus, chocolate wasn’t the key interest common values and complementary agility. This is particularly important in
per se; it was the chocolate’s organic strengths. If the shared values aren’t the fast-changing Chinese market.
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Victorinox: Built to Last
F
or some travellers to Associate Professor of Marketing
Switzerland, it is a must to buy Jane Wang, CEIBS Vice President
Swiss army knives as souvenirs, and Dean Professor Ding Yuan, HEC
but for the participants of the Exchange Lausanne Associate Professor of
of Excellence Programmes offered Financial Accounting Dong Minyue,
at CEIBS’ Zurich campus, there is CEIBS research assistants Zhang Ling
an “upgraded version” of the travel and Wang Xiaozhou, as well as CEIBS
experience. In addition to studying research fellow Qian Wenying. This is
the Victorinox case and watching an excerpt from the case.
v i d e o c l i p s a b o u t t h e co m p a ny,
participants also visit the century- The white cross in a red shield is an
old Victorinox workshop based in emblem exclusive to the Swiss Army
Ibach, Schwyz, for a first-hand look Knife. In fact, in Switzerland, the
at supreme craftsmanship. They also emblem was until recently a privilege
have the opportunity to communicate shared only by Victorinox and Wenger
and interact with the company’s head – both century-old family businesses.
Carl Elsener IV as part of the unique In 2005, Victorinox acquired Wenger
learning experience. The Victorinox and in the process became the sole
case is a joint effort between CEIBS manufacturer of the knife.
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History US soldiers stationed in Europe bought knife of helicopters” have appeared
Victorinox army knives and took them across a wide spectrum of industries.
In The Beginning home as souvenirs known as “Swiss
army knives”. Product Line Expansion
In 1884, Karl Elsener Karl I opened a
cutlery workshop in Ibach. His mother In 1951, Victorinox launched the Swiss In 1989, in partnership with Forschner,
Victoria sold the knives he made. army knife with a bottle opener and a licensed dealer and US sales partner,
applied for a patent for it. Victorinox branched out into sunglasses
In 1891, Karl Elsener I learnt that the and timepieces.
Swiss army had decided to distribute According to repor ts, former US
knives to all of its soldiers. He then President Lyndon Johnson gave away In 1999, Victorinox moved into the
established the Association of Swiss more than 4,000 Victorinox knives travel gear market as a franchisee with
Cutlers, which consisted of many small embossed with his signature and TRG Group.
workshops. Larger volumes of orders started a new chapter of the knife’s
enabled his workshop to scale up its popularity with the White House. In 2001, Vic tor inox unveiled its
capacity. Taking advantage of this trend, many own apparel brand in the US and
American companies used Victorinox opened its first specialty store in New
In 1892, the workshop rolled out the army knives as souvenirs to attract York’s SOHO district carrying all
officer’s knife. In 1897, the officer’s consumers. of its products. All of Victorinox’s
knife was patented and the “Original products carried the same price tags
Swiss Army Knife” was registered. In An article in Reader’s Digest in 1978 in both specialty stores and franchised
1909, the cross-and-shield emblem was featured a story about how a folding dealerships.
registered. knife saved a girl’s life on a plane. When
the girl choked on a candy, passengers “User preference and feedback have
In 1909, Karl Elsener I registered unsuccessfully tried various means spurred us on to think about how to
“Victoria” as a trademark in honour of to save her. In a flash of inspiration, maintain product competitiveness.
his deceased mother. a physician aboard the flight made We should go to lengths to increase
a tiny incision in her trachea with investment so as to gain greater brand
In 1921, following the invention of a Victorinox folding knife he was visibility. Users like our Swiss army
stainless steel, the company pioneered carrying in his pocket and pulled out knives, but they usually keep them
stainless-steel cutlery. Karl Elsener II the candy, saving her life. The article in their pocket or wallet,” said Karl
created the “Victorinox” trademark – ended with a question: “What would Elsener IV.
where “inox” is an international term have happened without that Victorinox
for stainless steel. folding knife?” This article was a great According to a questionnaire, the
advertisement for Victorinox knives outdoor watch topped the list of
Mid-20th Century: Ascent and also associated intense emotions the ten most preferred Victorinox
with Victorinox products. products. Like Swiss army knives,
In 1931, Karl Elsener II introduced Swiss watches, renowned all over the
automation into the workshop which The Victorinox army knife has become world, are made of stainless steel. As a
enhanced the quality of cutlery. a synonym for premium quality and result, Victorinox decided to diversify
multifunctionality. Ad slogans such as its business by making inroads into
In 1945, after the end of World War II, “Our helicopters are the Swiss army the watchmaking sector.
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By putting its watches through 130 army knife unit to watch and kitchen Instead of undertaking an aggressive
quality tests, double the average number cutlery units. expansion, Victorinox put a premium
of tests used in the watchmaking sector, on sustainability. “The September 11
Victorinox designed and manufactured Products: Victorinox launched a series attacks made us aware of the enormous
“the Swiss army knife of the of new products, including army risks in over-dependence on a single
watchmaking industry”. Carl Elsener IV knives, folding tools, and wrist watches product category, encouraging us to
explained, “The Victorinox watch must with new functions. boost our diversification,” Carl Elsener
be shock-resistant and waterproof IV said. “However, keeping our brand
so as to keep perfect time even when Sales channels: Victorinox set about spirit from being eroded is our bottom
dropped from a height of ten metres or selling products permitted by new line. Even one product below par would
put into a washing machine.” regulations at airport duty-free stores, likely put Victorinox’s century-long
such as watches and tr avel gear. reputation on the line. Turning down
In 1999, Victorinox set up Victorinox Meanwhile, it expanded into new sales an offer of cooperation, in contrast, is
Watch SA as its watchmaking company. channels. For example, army knives no great loss.”
with USB drives were made available at
To t h e c o m p a ny ’s s u r p r i s e , t h e stores that sold tech products.
September 11, 2001 attacks on the US
exerted a huge impact on Victorinox.
Since the terrorists used folding knives
to take over the planes, new aviation
safety regulations that came into effect
following the September 11 attacks
prohibited passengers from taking knives
on board. The September 11 attacks and
new aviation safety regulations dealt
a heavy blow to the army knife sector,
since airport duty-free stores had long
been major sales channels for Victorinox
army knives. “The sales of Victorinox
army knives plunged more than 30% Acquisition of Wenger
overnight,” recalled Carl Elsener IV.
Before World War II, Wenger had been larger than Victorinox, but it was more
Before then, sales of Swiss army knives
than ten years behind Victorinox in introducing automation. As a result, after
had accounted for more than 50% of
World War II, Victorinox left Wenger in the dust. The following table compares the
Victorinox’s total revenue.
two companies’ sales data as of 2004:
Subsequently, Victorinox took a series
of measures to mitigate the impact of Market Share of Swiss Sales of Cutlery
Headcount
the new rules: Army Knives in 2004*
Victorinox 70% 1,350 169
Capacity: Victorinox adjusted the
capacity of each product category, Wenger 150 23 23
transferring some people from the * In millions of Swiss Francs
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23
Unlike Victorinox, Wenger failed to channelled into a charity fund for the long-term development of the
build up its surplus reserve. To expand public welfare events. Incidentally, company.”
its product line, Wenger frequently Victorinox has never applied for a bank
pledged its shares to take out bank loan, which is one of the main reasons Victorinox has also attached greater
loans. In the post-9/11 era, however, it has survived two World Wars and importance to social responsibility.
sales of Wenger army knives did not several economic crises. They provide lifetime free repair
pick up. By the end of 2004, sales of services for customers of the army
Wenger cutlery plummeted by 43%. Victorinox has also adopted a dual knife. Some customers’ knives are
As Wenger’s financial position took a g o ve r n a n c e s t r u c t u r e f e a t u r i n g handed down from their grandfathers
nosedive, the banks decided to sell their the Foundation Committee and a and Victorinox still offers free repair.
stake. Board of Directors. The Victorinox Even today, Carl Elsener IV still receives
Foundation Committee takes on the letters from customers all around the
In 2005, Carl Elsener IV acquired duties of preserving the core values of world.
Wenger. He also promised not to lay the family/firm, formulating a long-
off employees and to keep Wenger term strategy, using the profits and Victorinox has never chosen to lay
operating on its own. In 2013, he surplus, and selecting members of the off its employees on the grounds of
declared the merger of the army knife corporate management committee. economic downturn, even during
businesses of Wenger and Victorinox, The Victorinox AG Committee is in the First and Second World Wars or
with other business units unchanged. charge of business development. The the Great Depression. Even during
As a result, Victorinox defeated its two committees do not overlap in difficult times in the aftermath of the
long-time rival by way of the knife, the terms of membership. The Victorinox September 11 attacks, no one was laid
brand’s most central product. Foundation Committee is made up off. Victorinox’s HR department has
of family members. However, Carl made it a top priority to create jobs
Ownership Structure and Elsener IV pointed out that Victorinox for surplus labour. Its HR staff have
Family Governance would consider recruiting external recommended Victorinox employees to
managers if family members were no neighbouring companies which had a
Before 2000, Victorinox was a joint- longer interested in corporate business desperate need for temporary workers.
stock company. Family members and pulled out of the Foundation These employees returned to the
shared stock, but the Elsener family Committee. company after the crisis.
was worried that its descendants would
dilute the stock and press for enormous “Family members don’t have any Carl Elsener IV is full of passion for his
dividends during business succession, privilege. We have to make sure the undertaking. It is from this passion that
which could lead to Victorinox’s people who hold key positions are Victorinox has scaled to new heights
decline. Therefore, Carl Elsener VI competent. We prefer a family member under his leadership. However, in the
and his father decided to establish the only when he/she and other candidates context of the company’s foregoing an
Victorinox Foundation. are similar in education, experience, IPO, banning dividends, and setting
and capabilities.” Nevertheless, he high standards for family members to
The Foundation has 100% control added, “Family members working join the company, can the 24 members
of Victorinox. Victorinox AG pours at Victorinox are also important for of the family’s fifth generation continue
90% of its profit into the Victorinox ordinary employees. That means the to maintain the same passion and
Fo u n d a t i o n a s s u r p l u s r e s e r ve s family and ordinary employees are cohesiveness? It is a question worth
annual ly. T he remaining 10% is in the same boat, which is vital to deep consideration.
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