Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A, B)

Authors: Sebenius, James K.; Qian, Cheng
Source: Harvard Business School
Year: 2010
Company Name: Esquel Group
Number of pages: 9, 7

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Abstract:

Esquel Group, leading manufacturer of quality shirts, sought to negotiate long-term partnerships with often-exploited farmers in Xinjiang (western China) to procure a superior cotton variety. Seeking to secure a large supply of specialty cotton in an ethical and socially responsible fashion, Esquel undertook a major 2002 initiative to negotiate value-creating contracts among itself, local Xinjiang municipal governments, and cotton farmers. Aware that contract enforcement in China can be challenging, Esquel offered the region's poor, often-suspicious farmers attractive advanced financing, guaranteed minimum pricing, and other generous terms in return for an agreement to sell their crop exclusively to Esquel. The case concludes with the specialty cotton harvest shaping up as very good while demand for the premium cotton fiber appears to be stronger than ever.