Center for Ethics and Business

Business Ethics Fortnight
"More Fun than Decent People Think Should Be Legal"

Saint Louis University

Team Members: John Stroup, Rui Zhang, Joshua Turner

Advisor: James Fisher

Topic/Audience: Sanyo's Dilemma in its Quest for Growth in China

Executive Summary

Society is indeed a contract.... It is a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection. As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.
-Edmund Burke

The Japanese electronic giant SANYO Group has entered into a joint venture with Gold Peak (GP) Batteries to produce manganese dioxide primary Lithium batteries. This new agreement partners SANYO, the world’s leading rechargeable battery manufacturer with China’s largest consumer battery manufacturer. Ningbo, Zhejiang province in mainland China is the site of the new plant that will produce the batteries mainly used in digital cameras and cellular phones.

Soon after the agreement was signed, reports surfaced that nearly 200 workers in other GP factors on the mainland were found to have unsafe levels of cadmium in their bodies. Affects of long-term cadmium poisoning include respiratory, kidney and bone diseases, including cancer. Advocacy groups, the media, and the Chinese government have demanded an inquiry into the working conditions and safety procedures in the GP factories.

The partnership between SANYO and the Singapore-based GP comes at a time when major competitors to both firms have made similar agreements. US-based Gillette, the parent company of Duracell, a global leader in Alkaline batteries, bought a majority share in Fujian Nanping Nanfu Battery Company Ltd. The purchase partnered the former rivals in the Chinese market. Another major batter maker Rayovac acquired an 85 percent stake in the Ningbo Baowang Batter Company during the same time.

SANYO has commissioned the International—Business Ethics Group (I-BEG) of consultants to help the company analyze the legal, financial and ethical concerns of its latest partnership. SANYO has the opportunity to:

Moving forward enforcing higher standards

Based on an extensive analysis of the issues surrounding the partnership, I-BEG has made the recommendation to the SANYO board of directors to continue with the joint venture in a mentor-type role to the Chinese battery manufacturer. I-BEG’s recommendation considers the significant legal risks, duties to stakeholders, and SANYO’s goal of winning the hearts and trust of people all over the world.