Nestlé and Totole: A Foreign-invested Enterprise in China

Case Solution

Libo Fan, Yingchao Zhou, Oded Shenkar
Ivey Publishing ()

After acquiring a majority stake in Shanghai Totole Food Company, a leader in China’s chicken powder industry, Nestlé struggled to maintain control of this foreign-invested company (FIE). Despite its 80 percent stake and contrary to previous practice, the Swiss company left control to its minority Chinese partner. The circumstances surrounding the integration of Totole raised questions about strategic decisions related to investing by a multinational company in a Chinese company and the challenges of integrating local and global operations. In 2012, Nestlé began discussions with the CEO of Totole to acquire the remaining 20 percent of the company. Should Totole sell the remaining 20 percent of the shares, and if so, how and when?

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