Calbee Abandons Joint Venture with Philippine Company

Category: Business

Listening

Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. relinquish / rɪˈlɪŋkwɪʃ / (v) – to let go of something
    Example:

    The manager decided to relinquish control over the initiative after receiving complaints from the staff.


  2. team up / tiːm ʌp / (phrasal) – to work together
    Example:

    Two departments teamed up to finish the project faster.


  3. accrue / əˈkru / (v) – to gradually increase in value or amount over time
    Example:

    After it accrued a huge profit loss, the company declared bankruptcy.


  4. profitability / ˌprɑːfətəˈbɪləti / (n) – the ability of a business to earn money
    Example:

    The company hopes to improve its profitability by increasing its visibility on social media.


  5. tycoon / taɪˈkuːn / (n) – a very successful and wealthy business person
    Example:

    The business tycoon owns many companies in the country.


Article

Read the text below.

Japanese company Calbee relinquished its joint venture with Universal Robina Corporation (URC), a Philippine company.


In 2014, Calbee teamed up with the URC to sell its famous potato chips and to increase its market share in the Philippines. Back then, both companies had an equal partnership of the Calbee-URC, Inc. (CURC). But recently, the Japanese company sold all of its shares to the URC after accruing losses amounting to more than $5 million in three years.


Calbee reportedly sold its 50% share of the CURC for more than $3 million, giving the URC sole ownership of the Philippine company. The Japanese snack manufacturer came to the decision after analyzing the company’s international business strategy and profitability. A Calbee official cited that the company’s weak sales growth in the Philippines could be attributed to the higher price of Calbee chips as compared to local chips produced by the URC.


Despite leaving the joint venture, Calbee gave the URC the license to continue manufacturing and selling the Calbee brand in the Philippines. This is because the market for snacks in the country remains promising.


Calbee is not the only Japanese consumer company to exit the Philippine market. Last year, two other Japanese companies—FamilyMart and Itochu Corporation—already pulled out their shares from a Philippine company called Philippine FamilyMart CVS Incorporated (PFM). The company operates FamilyMart, one of the leading convenience stores in the Philippines with over 60 branches.


The PFM is now under the management of Phoenix Petroleum, an oil firm owned by Filipino business tycoon Dennis Uy.


Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

• Do you think Calbee’s decision to withdraw from its joint venture with the URC is a good move? Why or why not?

• If you were the owner of the URC, would you buy the shares of Calbee?


Discussion B

• If you were a company owner, would you take the risk of partnering with international companies? Why or why not?

• Given the chance, which foreign company would you want to team up with? Why?