Managing Risk When Cooperating With Chinese Partners - A Swedish Perspective in the Pharmaceutical Industry

Sammanfattning: Pharmaceutical companies experience new challenges in the face of steadily increasing costs for drug production coupled with a decrease in the number of approved drugs. While the pharmaceutical industry remains tentative in Sweden, it is extensively growing in China. Chinese businesses are now on the lookout for foreign experience and know-how in production and R&D. This provides an opportunity for both parties to engage in strategic alliances. Nevertheless, strategic alliances present risks that partner firms need to be aware of. This study investigates how Swedish pharmaceuticals can manage perceived risks when cooperating with Chinese pharmaceutical firms. Through academic journals, two main mechanisms were identified as being of particular influence in the management of perceived risk: trust and control. A qualitative study of nine interviews was conducted in order to determine how Swedish pharmaceutical companies manage risk when engaging in strategic alliances with Chinese partners. Six men and women employed in three different pharmaceutical companies were interviewed along with three experts from the industry. The empirical investigation results in a description of a sequence of trust-enhancing activities and control mechanisms. Network and communication are found to be essential trust-enhancing activities, enabled by a Chinese employee. The study conclusively determines that a Chinese connector is the key in the management of perceived risk.