White Gold in Benin: Chinese Investment in Cotton

Case Solution

Zhangfeng Fei, Xiaokang Zhao, Kejing Zhang, Alex Beamish
Ivey Publishing ()

The Chinese chairman of the China-Benin joint venture Benin Textile Company (Compagnie Béninoise des Textiles, CBT for short) was very concerned about the cotton supply in Benin in mid-June 2011. Since 2009, CBT has faced significant challenges to ensure a reliable supply of cotton. The company had already placed its cotton orders in 2010, but local cotton producers in Benin were unwilling to supply cotton at the previously agreed price due to the increase in the market price. CBT had to stop production for five months and was unable to fulfill numerous orders. The CBT president was unsure whether to stay in West Africa and, if so, how to improve the cotton supply situation. He had four options: maintain the status quo and wait for improvements, withdraw from West Africa, buy cotton contracts from other countries, or invest in cotton production. What would be the best option for your company?

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