This Case is aboutÂ GROWTH STRATEGY, JOINT VENTURES, LEADERSHIP, NEGOTIATIONS, SOCIAL RESPONSIBILITY
PUBLICATION DATE: November 12, 2010 PRODUCT #: 916S02-HCB-SPA
Esquel Group, top maker of quality tops, sought to negotiate long term partnerships with regularly-used farmers in Xinjiang (western China) to procure a first-class cotton assortment. Trying to fix a sizable supply of specialty cotton in an ethical and socially responsible manner, Esquel undertook a major 2002 initiative to negotiate value-creating contracts among cotton farmers, local Xinjiang municipal governments, and itself. Mindful that contract enforcement in China can be challenging, Esquel offered the area’s poor, frequently-leery farmers appealing advanced funding, guaranteed minimal pricing, and other generous provisions in return for an arrangement to sell their harvest just to Esquel. The case concludes with the specialization cotton crop while demand for the superior cotton fiber is apparently more powerful than ever, shaping up as quite great.