Kitchen Best

Kitchen Best, a Hong Kong based SME, has grown rapidly and is now a

significant player in the manufacturing and distribution of small

kitchen appliances (rice cookers, pressure cookers and electric water

dispensers). Its manufacturing operations are across the border in

southern mainland China. The owner/founder is stepping back from the

day-to-day management of the operations and has now brought in his US

university-trained (MBA) son to be the CEO; the new CEO has an

ambitious goal of doubling sales in four years and selling their

products more globally. Key managers are based in mainland China.

There have been a series of incidents and challenges (Shago, Haus de

Metro, and Honghua) relating to corruption, bribery, family

bias/preference and other unethical practices that the new CEO has to

now deal with in order to restore Kitchen Best’s business reputation

and competitive advantage. Complicating this even further is the

reality that Kitchen Best is now operating in multiple jurisdictions

that expose itself to different legal laws (and varying levels of

enforcement), business ethics/practice, culture, societal norms and

values. Finally, the corporate culture of Kitchen Best is that of a”

big family” as it has been run paternalistically; it has little in

terms of Internal Control systems and has very questionable levels of

Management Integrity.

2. Who are the key players involved in the case?

Individuals at Kitchen Best:

- Chan Dong-hwa: Founder and Chairman (“treat my employees like family”)

- Li Qingyang: Silent 25% Equity Partner (85, aunt of Li Meihua and

grandmother to Horatio Sze)

- Henry Chan: CEO (son of Founder, MBA from US university)

- Ma Luk: Operations Director and Head of Greater China Business

(right hand man to Founder and long-time employee; reports to CEO)

- Horatio Sze: Purchasing and Production Manager (reports to Luk; Li

is his grandmother)

- Macy Wei: Quality Control Manager (reports to...