4. If you were Paul Young, what would you do?

It was December 2003, and Paul Young, the financial con- troller of Xian-Janssen Pharmaceutical Ltd (XJP), was preparing for a meeting with the CEO of the company, Christian Velmer, to discuss the 2004 business plan. XIP was Johnson & Johnson's (&) joint venture entry into the Chinese market. XJP was one of J&J's largest single operating companies, and was now expected to close 2003 with Rmb 1.006 billion in earnings ($121.6 million). The CEO of XJP had already passed on corporate's earnings objectives for 2004: Rmb 1.205 billion, just under a 20% increase. Although XJP had performed well in recent years, averaging 20% annual earnings growth despite many challenges including the SARS epidemic in 2003. meeting corporate's objectives this time would be diffi- cult. Many of XIP's direct and indirect expenses had been rising, including foreign exchange losses.