Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A)

Posted: 18 Mar 2012

See all articles by James K. Sebenius

James K. Sebenius

HBS Negotiations, Organizations and Markets Unit

Cheng Qian

affiliation not provided to SSRN

Date Written: November 12, 2010

Abstract

Esquel Group, leading manufacturer of quality shirts, sought to negotiate long-term partnerships with often-exploited farmers in Xinjiang (western China) to procure a superior cotton variety. Seeking to secure a large supply of specialty cotton in an ethical and socially responsible fashion, Esquel undertook a major 2002 initiative to negotiate value-creating contracts among itself, local Xinjiang municipal governments, and cotton farmers. Aware that contract enforcement in China can be challenging, Esquel offered the region's poor, often-suspicious farmers attractive advanced financing, guaranteed minimum pricing, and other generous terms in return for an agreement to sell their crop exclusively to Esquel. The case concludes with the specialty cotton harvest shaping up as very good while demand for the premium cotton fiber appears to be stronger than ever.

Learning Objective: Negotiating enforceable contracts in China; overcoming suspicion to forge long-term, value-creating partnerships with local Chinese governments and farmers.

Suggested Citation

Sebenius, James K. and Qian, Cheng, Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) (November 12, 2010). Harvard Business School NOM Unit case no. 911-031, Available at SSRN: https://ssrn.com/abstract=2023593

James K. Sebenius (Contact Author)

HBS Negotiations, Organizations and Markets Unit ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-9334 (Phone)
617-496-7379 (Fax)

Cheng Qian

affiliation not provided to SSRN

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