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1、材料3SellingWaterforChinabyDrBobMarchOverviewAcquaInternational(AQ)isaEurope-basedmultinationalcompanythathasinterestsinwaterandotherenvironment-relatedbusinesses.InChina,thecompanyhasjointventureswithmedium-sizeandlargemunicipalitiestoproducepotablewater・Toincreaseitsinve
2、stmentsinChina,theAQGrouparranged,throughitslocalsubsidiaryPacificAcquaInternational(PAQ),toenterintoastrategicalliancewithTakFoyandCo.,aChineseconglomeratewithstrongrootsinChinaandHongKongintheserviceindustry(mainlyleisure-related).TheventureiscalledHaoyuChinaLimited(HC
3、L).TheSceneThesenegotiationsconcernedanurbanwatersupplysystemprovidingpotablewatertoaroundonemillionpeople・Throughanagentintheprovince,theChinasubsidiaryPAQhadsecuredacontracttoconstructawatertreatmentplantforthesystem.Sometimeafterthecompletionandcommissioningoftheplant
4、,PAQlearnedfromthesameagentthatthemunicipalitywasshortoffundsforsomeurgentdevelopmentprojects.Oneofitsoptionswastoprivatizethemunicipality^watersupplyfacilities.Thesalevalueofthefacilitieswassetbythemunicipality,andbiddersweresoughtfromwithinitsjurisdiction;therewouldben
5、orecoursetothecentralgovernmentforapproval.HCL,locatedinthemunicipality,submittedapurchasingproposaltobuythefacilities,tosetupajointventurewiththemunicipality,swatercompanyona3:1ratio,andtooperatethefacilitiesonatwentyfive-yearcontract・Theunresolvedissueswhenbidswerecall
6、edforwere:Initialwatercharges・Theonlythingsthathadbeenagreedonuptothisdatewerehowmuchwouldbeinvestedinthefacilitiesandspentonimprovements・Thedemandforwater.Tomakethebusinessfinanciallyviable,atake-or-paymechanismwouldhavetobeintroduced,andlocalwellswouldhavetobeclosed.Th
7、eformulatocalculateannualwatertariffrevisions.Devaluationoftheyuanwouldaffectforeignexchange-basedinvestment.Thenewcompany^structure.Whowouldbetheshareholders,boardmembers,andthoseresponsibleforitsday-to-daymanagement?NegotiationsBeginAttherequestoftheChinese,amemorandum
8、wassignedbyHCLandthemunicipalitytorecordtheissuesstilloutstanding.ItwasonlythenthatPAQ一andthroughitHCL一