The capital tie-up with China’s Haier: ceding the mass market (2002)

The right strategy, the wrong read on the partner

This alliance can be seen as a decision in which a sound strategy and a naive read of the partner lived side by side. Avoiding a head-on war of attrition with the Chinese makers and joining forces on the ground where Sanyo was strong — components — was a realistic choice for a company that owned little to survive by. In that a firm born of avoiding a collision with Matsushita met its crisis, to the very end, by the logic of dividing the field, it was also a move that showed Sanyo’s character well.

But how you choose the partner to divide the field with is exactly what decides the contest. Sanyo could not read how far its partner would grow beyond the market it ceded. The company it entrusted with the mass market climbed all the way into components and brands, and would in time be among those picking up Sanyo’s businesses — so that, however right the direction of the strategy, a misjudgment of the partner’s room to grow can turn a handover into the doorway to retreat. The lesson of this decision seeps from the fact that a company which read China’s rise early was tripped by the very speed of that rise.