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-164-SHA-4309-03690-08-15d.PPT-xD.Restructuringoptions-165-SHA-4309-03690-08-15d.PPT-xD1.Generaloptionsandpre-selection-166-SHA-4309-03690-08-15d.PPT-xInChina,asfarasforeigninvestmententerpriseisconcerned,thereexistthreemainrestructuringcategoriesRestructuringofinvestmentprojectsinChinaTurnaroundofJVEquitystructurerestructuringWithdrawal-167-SHA-4309-03690-08-15d.PPT-xOnthebasisoffavorableresultsofmarketandcompetitiveanalysis,optioncategoryIandIIaremostcommonlyusedforcompanies’long-termdevelopmentCharact-eristicOption1:TurnaroundofJVOption2:Equitystructurerestructuring•Performanceimprovementwithoutchangingtheequitystructure•Performanceimprovementwithequitystructurechange–BuyoutOption3:Withdrawal•Withdrawalfromexistinginvestmentprojects–Selloutequity–Termination–Bankruptcy–Freezing(walkaway)Examples•BoschSiemens•Siemens•Bayer•Henkel•ABB•Dinova•BOSCHThermoTechnik•Lindeforklifter•Whirlpool’srefrigeratorJVinBeijing•PeugeotGuangzhou•Liebherr•Siemens-168-SHA-4309-03690-08-15d.PPT-xThegeneralmethodologyistofilteroptionswithkillercriteriaandhardcriteriatoscreenoutrestructuringalternativesPotentialoptionsPre-selectionIn-depthevaluationConclusionRestructuringalternativesKillercriteriaHardcriteria•Solvekeyproblems•SecurefuturesuccessGeneral•Cost•Time•RiskIntegration(GSHA-GDAI)•Sales&marketing•Management•OthersProcedureImplementation-169-SHA-4309-03690-08-15d.PPT-xAtpre-selectionstage,turnaround,selloutequityandfreezingcanbeeliminatedwithkillercriteriaPre-selectionChinesePartnerin?KillercriteriaSolvekeyproblemsSecurefuturesuccessPass?RemarksI.TurnaroundII.Equitystructurerestructuring-EquitybuyoutIII.Withdrawal(1)Selloutequity(2)Termination(3)Bankruptcy(4)FreezingYesNoYesNoNoYesNoYesNoYesYesNoNoYesNoYesYesNoNoYesNoYesYesNo•It’sveryhardtoimplementfutureintegrationandconsolidationwithoutfullcontroltheboardofdirectors•Geberitgainsfullcontrol•It’salmostimpossibletofindabuyer•Itopensthewayforanewstart•Itopensthewayforanewstart•FreezingwillruinGeberit’srelationwithlocalgovernment,thuscausingpotentialhurdleforfuturepresenceandtroubletoGDAI-170-SHA-4309-03690-08-15d.PPT-xTermination•ToceaseoperationandliquidatetheJVFreezing•WithdrawallforeignmanagementteamandexpatriateemployeesandleavetheJVtoChinesepartnerwithoutfileterminationorbankruptcy.It‘sanillegalbutwidelyadoptedpracticeinChinaBuyout•TobuyouttheequityownershipfromChinesepartner,thusturningtheJVintoawhollyforeignownedenterprise(WFOE)Bankruptcy•TofilebankruptcyandliquidatetheJV.IfthecreditorisJV’sforeignparentcompany,tofilebankruptcybycreditoristheoreticallypossiblebutpracticallyinfeasibleinChinaBack-upDefinitionofsomeoptions-171-SHA-4309-03690-08-15d.PPT-xSomekeyproblemsofGSHAarecloselylinkedtotheChinesepartner.Acleanbreakcanonlybeassuredbyaseparation•TheVGMofLidamaintainsanunofficialnetworkconsistingofformerLida-employees.Heoftenusesthisnetworktosecurehispersonalinterests•SincethisVGMhasdirectaccesstopersonnelfiles(Fuehrungszeugnis)someemployeeswereblackmailediftheydidn’tcooperatewithhim•IncontextwiththeNanxiangproductionsitetheVGMshouldhaveacceptedaconsiderableamountofkickbacks,saidsomeformerGSHA’semployeesBack-up-172-SHA-4309-03690-08-15d.PPT-xKeystatementfromsomeformerGSHAemployeesonMr.Cai(1)•Thereisnocooperationbetweentwopartnersfromtheverybeginning.Mr.Caisaidwemakethisjointventurebankruptin3years.Wecanrestartagainbyourselves.ItdoesnotmatterthatGeberitislosingmoneyinChina.IttookGeberit10yearstomakeprofitsoverseas,itneedsthesametimeinChinaaswell.Anyhow,itisGeberit'smoney.Mr.CaihasextensivenetworkintheindustrybuthedoesnotuseitforGeberitproducts.Incontrast,heintroducedthebusinessforothercompaniesthathavecloserelationshipwithhim.•AlltheimportantdecisionsregardingpersonnelrecruitingaremadebyMr.Cai.MrSchuettedoesnotandisnotabletoinfluencethesedecisions.SomeofthesedecisionsareagainstGeberit'sinterests,forexample,someChineseemployeesintendnottodotheworkproperlyandsomekeypersonsinkeypositionsarenotqualified,suchasproduction,stockcontrol,CCSetc.•Thecontrolsysteminthecompanyistotallyscrapped.Atthebeginningofthejointventure,aboutRMB600Kmachinesand100mouldswerelostwithoutanyrecord.Thewarehouseonlychecksthebookrecordsratherthanrealgoods.Asaresultthereisdifferencebetweenthebooknumberandtherealamount.Thisisespeciallyseriousontheincomingrawmaterials.Theysuspectthatsomefinancialaccounts,especiallydonebyMr.Changdaohua,arefalse.Theso-calledscrappedproductsandthewasterawmaterialsaresoldinanottransparentway,i.e.nospecificpriceandnoinvoice.TheresponsiblepersonisappointedbyMr.Cai.Duetothepoorcontrolsysteminallareaswasteishigh.Auditingisextremelynecessary.Back-up-173-SHA-4309-03690-08-15d.PPT-xKeystatementfromsomeformerGSHAemployeesonMr.Cai(2)•Geberitproducts'technologicalknow-howisobtainedbyLida.Mr.CaiassignedonepersoninCCS(Ms.YingHua)andhasobtainedrelevanttechnologicalinformation.ItispossibleforLidatoproducesimilarproductsifGeberitwithdrawsfromthejointventure.Moreseriously,itisbelievedthattheknow-howofDuofixhasbeenreleasedtoTOTO.•Thebusinessoriginalplantlocationis100metersfurthernorth,witho