By Frank-Christian Raffel
Dr. Franz Köhler Chemie (DFKC) is a research-intensive and innovative pharmaceutical company and is owner-managed in the third generation. DFKC is, among other things, the manufacturer of the organ-protective solution CUSTODIOL©, which is distributed worldwide by DFKC.
Starting Point
China is one of the most important markets in the world for DFKC. Due to the excellent health effects of CUSTODIOL©, DFKC entered the market very early on in cooperation with Chinese distributors.
MRL Advisors carried out a market and competition analysis for DFKC in China, which confirmed the potential that was assumed to still exist.
Objectives DFKC
The management of DFKC had decided to establish a separate corporate presence in order to better exploit the market potential, improve the strategic management of activities and implement the brand strategy in China. The two Chinese distributors were invited by DFKC to participate in a joint venture.
Tasks of MRL Advisors
MRL has been commissioned by DFKC to structure and negotiate a joint venture with the two Chinese distributors and DFKC.
MRL has implemented a structure that gives DFKC ultimate control over its business activities in China (Note: Frank-Christian Raffel has already conducted a study on success factors of China engagement together with the AHK in Hong Kong and Shanghai among more than 400 German companies with a presence in China in 1997, from which key findings have been incorporated into the consulting practice of MRL Advisors; see below).
Image: DFKC, Custodiol
Result: target-oriented joint venture model
The model developed and negotiated by MRL Advisors, Frank-Christian Raffel in the lead for DFKC in China has the following key points:
- DFKC is majority shareholder
- One of the Chinese distributors as a minority shareholder
- Furthermore, MelchersRaffel Ltd. is a minority shareholder (MelchersRaffel Ltd., Hong Kong, is a joint venture of the Bremen-based company Melchers and Frank-Christian Raffel and worked as a sub-contractor for MRL Advisors).
- Melchers (Beijing) Ltd. (“MBL”) is also a minority shareholder.
The JV Koehler Pharmaceuticals (Beijing) Ltd. was founded in mid-2020 under the Foreign Investment Law (FIL), which has been in force since January 1, 2020 and enables significant positive structures for the corporate governance and management of companies in China.
The founders at the signing dinner, from right to left: Frauke Weiss and Dr. Gernot Köhler (DFKC shareholders); Candy Cheng (MelchersRaffel Ltd.); Lily Jiang and May Li (CICEL, Beijing); Augusto Blasi (DFKC); Frank-Christian Raffel (Managing Director MelchersRaffel Ltd., Hong Kong and MRL Advisors GmbH, Munich).
In this respect, MRL Advisors has taken full advantage of the new opportunities created by China’s legal system for foreign companies in China to largely support the ultimate goal of ultimate JV control at DFKC. MRL Advisors has also invited Melchers (MBL) to participate in the joint venture and to provide additional services as a corporate service provider for the joint venture.
JV KPBL is now well established on the market and is developing very satisfactorily.
Upon request, MRL Advisors will be happy to illustrate the key design elements for successful companies in China Ultimately, the design findings of MRL Advisors are based on decades of experience and the 1997 study in China (open INSIGHT here).
