Crown Worldwide Group: Relocating in China Under the Closer Economic Partnership Arrangement
In June 2003, the governments of Hong Kong and the People's Republic of China signed the Closer Economic Partnership Arrangement (CEPA). CEPA outlined terms for the liberalization of trade in goods and services and enabled firms incorporated in Hong Kong to establish wholly owned businesses on the mainland. One firm that benefited from the liberalization was the Crown Worldwide Group. Founded by Jim Thompson in 1965, and based in Hong Kong since 1970, Crown had evolved into the world's largest privately held company providing relocations and records management services, and had become a significant player in the field of logistics. By 2003, the company had a global network of offices and warehouses in more than 100 cities on six continents. Following the signing of CEPA, Crown formulated a plan for building state-of-the-art warehouse/office complexes on the mainland. The first was to be in Shanghai, to be followed by a second in Beijing, and then others in several more cities. Crown was successful in the first phase of implementing its strategy: by August 2006, Shanghai employees had been working out of the new facility for more than a year. Meanwhile, Crown had located a plot of land in Beijing and had completed site preparations--but progress on construction had stalled due to unexpected delays in project registration approval from Beijing authorities. The delay raised the question: How best to proceed? As he considered his options, Thompson weighed tactical considerations and strategic concerns. Economic logic suggested the need to get the construction project back on track as quickly as possible. Nonetheless, he knew that any action had to be consistent with the core values he had cultivated at Crown, the reputation his company had earned as a world-class provider of logistics services, and Crown's plans for further expansion in China.