Wednesday, October 29, 2008

China Melamine Sanlu and Fonterra will they recover or will Fonterra lose NZ$200million

I have looked at the Sanlu /Fonterra case and NZ business's ownership in Australia, and China and the melamine problem.Fonterra had a NZ$200 million stake in Sanlu. The questions I ask what went wrong why is it so wide spread, why and who covered up and delayed releasing the story and who from NZ is responsible. New Zealand companies from an historical context and a Australian company I worked for which is owned by a NZ company. And now the Sanlu case shows to me the inablility for NZ companies to effectively control and manage there investments overseas.The examples I will give you are Air New Zealands ownership of Ansett, they failed to correctly evaluate the company before buying it and no its strengths and weakness's e.g. Nepitism, old fleet, and no changes to the management structure when they bought the company.Penglellys owns ITM in Australia and they run this company by remote control and have got no control measures in place to protect their investment, they will run into trouble if not very careful., and Fonterra there name is tarnished have lost so far NZ$95million and more to come. What are they going to do about rebuilding Sanlu and put control measures in to protect theiryour investment and NZ reputation.
My suggestion would be to change the name to your NZ name and call it Fontera China as an example put a NZ management team in to find the problems and rebuild the company and look at acquistion and expansion and deliver a quality product at a higher price.The Chinese are well known for selling a low priced products and cutting costs to deliver the product this is particular common here in the Philippines in DVD's and Xmas lights the dvd player didn't work when I got it home and the Xmas lights switchs were fkexible and dangerous.They will need a manager, a purchasing manager, a marketing manager, and a dairy adviser as a basis. You need to deliver a quality product Chinese can trust and sell that way.Fonterra have dropped the ball and lost money and thier your reputation pick the ball up and fix the problems up don't run like Air New Zealand and the government had to bail Air New Zealand out.

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