PROGRAM ON NEGOTIATION AT HARVARD LAW SCHOOL

AN INTER-UNIVERSITY CONSORTIUM TO IMPROVE THE THEORY AND PRACTICE OF CONFLICT RESOLUTION

CANADA-CHINA PANDA ACQUISITION NEGOTIATIONS

Canadian Team
Confidential Instructions for John Smith, CEO of the Toronto Zoo
You are assuming the role of the CEO of the Toronto Zoo, John Smith, in a negotiation in
Beijing with the Chinese Association for Zoological Gardens (CAZG) to procure giant
pandas for an extended stay at your zoo. It is the spring of 2010, and you have just been
appointed as CEO by the Board of Management. You are new to the zoo, having spent
the last 20 years in economic development with the City of Toronto. The Boards
initiative to obtain pandas, which intensified several months ago, is one of its priorities.
You want to perform well in these negotiations and get off to a good start as CEO.

Toronto Zoo
Toronto Zoo, one of the worlds largest, hosts 5000 animals of 500 species on 710 acres.
About 1.3 million people annually visit the zoo. (The City of Toronto has a population of
2.5 million while the Greater Toronto Area population stands at 5 million.) General
admission is C$21 per person.
The zoo is a non-profit organization overseen by a Board of Management. The CEO
reports to the Board.
Zoo asse
assets
ard. Z
ts above
bove ground are owned by the City of Toronto, which
also covers year-end
end
nd budget shortfalls.
shortfalls. In 2009, thee zoo cost
ost $44 million to operate. Its
largest revenue sources
ources aare:
re: City of Toronto support (27%), admissions
admission ((27%), and food
services/gift shopss (20%)
(20%). Annual attendance at the zoo has been
relatively flat over a
een rela
relativ
20-yearr period.
period In 1985,
85, when the zoo rented
rente giant pandas for three
hre months (the only
previous
jumped
uss visit), the number of zoo visitors jump
ed
d almost 60% and aannual
nnual revenue
doubled,
d, from C$4.0
C$4 to
o C$7.5 million.
million

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The zoo is well-known for animal research, particularly in the area of reproduction. It
successfully bred the Vancouver Island Marmot in captivity and has played a leading role
in the species recovery. From only 30 marmots in the wild in 2003 (North Americas
most endangered mammal), the population has increased tenfold in the last seven years.
Some of this work was carried out in partnership with Calgary Zoo.

Giant Pandas
Giant pandas are cute, intriguingly human-like, and rare animals. They are sought by
zoos throughout the world. But the giant panda is native only to China and appears on
international and individual nations lists of endangered species.
This exercise was prepared by Stephen E. Weiss, Associate Professor of Policy and International Business, Schulich School of
Business, York University, with the assistance of Bok Nang Young Hoon and Joe Torzsok. It was inspired by the actual negotiation,
but a number of facts and figures have been altered or added for classroom purposes. Copies are available online at www.pon.org,
telephone: 800-258-4406 (within U.S.) or 781-966-2751 (outside U.S.); or by fax: 617-495-7818. This case may not be reproduced,
revised, or translated in whole or in part by any means without the written permission of the Program on Negotiation, Harvard Law
School, Pound Hall, Cambridge, MA 02138. Please help to preserve the usefulness of this case by keeping it confidential. Copyright
2012, 2013 by Stephen E. Weiss. Distributed with permission. All rights reserved. (Rev. 11/13)

CANADA-CHINA PANDA ACQUISITION NEGOTIATIONS: CANADIAN TEAM

CONFIDENTIAL INSTRUCTIONS FOR JOHN SMITH, CEO OF THE TORONTO ZOO

Historically, the Chinese government has treated the pandas as a national treasure, and
final decisions regarding international transfers have been made only at the highest levels
of government. Until the early 1980s, China presented giant pandas as state gifts to
countries (albeit a few). Then the government began allowing short, non-permanent
visits of the animalsbut only to zoos in selected countries. Nonetheless, the mid-1980s
became known as the rent-a-panda period, when official and other agents charged
roughly US$100,000/month per panda pair.
After sustained protests by international conservation organizations who viewed this
practice as the commercialization of an endangered species, the Chinese government
developed, in 1992, a new framework for panda loans to foreign zoos. Still in effect in
2010, it emphasizes long-term cooperative research. The typical framework loan of a
breeding pair of pandas is for 10 years at an annual fee of US$1 million. Foreign zoos
may obtain pandas either through the CAZG or the China Wildlife Conservation
Association (CWCA), each of which is affiliated with a ministry of the central
government.
Over two decades, Chinese and international efforts have significantly improved
collective breeding expertise, but panda reproduction remains a slow and risky affair.
Moreover, although 300 pandas are now protected in zoos and reserves (with some 1500
in the wild), the current goal of the conservation program is to increase that number to
500 and then reintroduce pandas to the wild.

Negotiations to Date
Toronto Zoo has been
years,, largely through Toro
Torontos sister city,
een working more than 220
0 yea
years
Chongqing, to bring
representatives
ng pandas back to Toronto
Toronto. In 2003
2003, zoo
oo representativ
epresentativ obtained a
ting that Chongqing Zoological Gardens
dens will provide
provid a breeding pair
letter of intent stating
das. In November 2009, the zoo
o s Board sent two representa
representatives to China and
of pandas.
zoos
received
minister,
Stephen
d reconfirmation of the letter. One month later,
later, Canada
Canadass pr
prime
ime m
inister,
nister, S
St
Harper,, paid a state visit to China. During his visit, he expressed to Chinas presid
president his
wish to obtain giant pandas.

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After the Prime Ministers return to Canada, Toronto Zoos Board established the Giant
Panda Acquisition Task Force (GPATF) with Dr. Ming-Tat Li, a Board member and
prominent community leader, as its chair. (For more information about Li, see below.)
The GPATF proceeded to gather feedback and support from various constituents within
Canada. Now, you and Dr. Li are ready to negotiate with CAZG representatives.

Current Agenda
In panda negotiations, topics for discussion generally include: the duration of the pandas
stay at the foreign zoo, lease fee, delivery (transportation, accompanying Chinese
personnel, etc.), panda accommodations (housing, food), veterinary and other care,
offspring ownership and care, subjects for cooperative research, and more.

Copyright 2012, 2013 by Stephen E. Weiss. Distributed with permission. All rights reserved. (Rev. 11/13)

CANADA-CHINA PANDA ACQUISITION NEGOTIATIONS: CANADIAN TEAM

CONFIDENTIAL INSTRUCTIONS FOR JOHN SMITH, CEO OF THE TORONTO ZOO

This negotiation need not cover all of the above items. Your priorities are duration, fee,
and delivery date. You may rank these items as you see fit.

Your Objectives
Your main goal is to acquire a breeding pair of giant pandas at the lowest possible fee so
that you can maximize their economic impact on the Toronto Zoo. You believe it is
critical for the zoo to obtain pandas as a star attraction. The Board of Management has
authorized you to agree to pay up to a total of US$4,000,000 in fees for the pandas visit.
(The Board did not stipulate a visit duration or distribution schedule.)
The zoo cannot afford to pay the typical annual fee of US$1 million plus related costs for
10 years. Your research has shown that new exhibits have a diminishing rate of return
with each passing year, the additional number of zoo visitors due to the new exhibit
decreases. The biggest boost in additional visitors due to a panda exhibit usually occurs
during the first three years. During the first year, zoo revenue could increase as much as
C$9.3 million, but a 10-year exhibit would likely cause a net loss. Cost estimates for the
construction of a large-scale, legacy panda exhibit at Toronto Zoo that meets Chinese
specifications are C$17 million. Alternatively, building a more modest enclosure could
reduce this cost by 30% to C$11 million. These expenses would exceed the annual
budget for state-of-good repair renovations at the zoo. Projected annual food costs are
high (C$150,000) because a giant panda consumes large amounts (10-18 kg/day) of
certain types of bamboo that are not in ready supply in Canada. All other panda-related
expenses not covered by the zoos normal budget and resources have been put at
lly. (See the exhibit
exhib below
exercise, assume C
C$200,000 annually.
below;; for thiss exe
C$1=US$1.)

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et specific aspiration levels (objectives) and initial off

offe
It is up to you to set
offers for the visit
poss
duration and the annual fee. (For the financial effects of different possib
possible combinations
wo items,, see the exhibit below.)) You have learned that Sann Diego Zoo, the first
of the two
can
an zoo to obtain a pair of giant pandas for 10 years, recently negotiated a fiv
fi
American
five-year
on of their agreementt at a reduced fee of US$500,000 per year.
year. Further, if
if yyou
extension
think the
(whatever
possible
he CAZG will insist on a 10-year term (whatev
atever the annual fee), one possib
course of action for you is to partner with another Canadian zoo such as Calgary Zoo and
share the pandas time. Another option, of course, is to reject the demand.
The Pan Am Games will be held in Toronto from July 10-26, 2015 and bring an
estimated 250,000 people to the city. If the zoo has giant pandas in place by then, it
could take advantage of this huge inflow of visitors.

About Dr. Ming-Tat Li

The chair of Toronto Zoos panda task force, Dr. Li, has been a member of the Board of
Management for two years. He is a practicing cardiologist who is widely known for his
community involvement and humanitarian work. Among other examples, he
spearheaded the building, just outside Toronto, of the largest Chinese Cultural Centre in
North America and has supported national and provincial programs for new immigrants
Copyright 2012, 2013 by Stephen E. Weiss. Distributed with permission. All rights reserved. (Rev. 11/13)

CANADA-CHINA PANDA ACQUISITION NEGOTIATIONS: CANADIAN TEAM

CONFIDENTIAL INSTRUCTIONS FOR JOHN SMITH, CEO OF THE TORONTO ZOO

and race relations. He also played critical roles in relief efforts for the SARS (flu) crisis,
the Sichuan (China) earthquake, and other overseas disasters. An accomplished civic
leader in international as well as Chinese-Canadian circles, Dr. Li recently received a
recognition award from the Governor General of Canada.

Calgary Zoo
As Canadas second largest zoo, Calgary Zoo is situated on 80 acres and the home of
more than 1000 animals of 290 species. The zoo receives about as many annual visitors
as Toronto Zoo does. (The population of the Greater Calgary Area is 1.3 million as
compared to Greater Torontos 5.0 million. Calgary lies 2700 km west of Toronto and is
a major city in the energy-rich province of Alberta.) Calgary Zoo hosted a pair of giant
pandas for a 7-month visit in 1988.
The zoo is managed by a non-profit organization, the Calgary Zoological Society. In
2009, total revenue was C$42 million. The zoos CEO is Dr. Clement Dupont, a
veterinarian who has worked in zoos for more than 20 years.

Final Instructions
You have 60 minutes to prepare for negotiations of up to 60 minutes in duration with
your Chinese counterparts (the CAZG team). Use this preparation time for your own
individual reading/planning and for discussions/planning with your Canadian teammates,
Dr. Li and Clement Dupont. During discussions with Dr. Dupont, make sure to clarify
the two zoos relationship
negotiation..
ationship for this negotiation
ne
For the meetings with the CAZG team, Dr. Li should assume the role of chief spokesman
ard-appointed chair of the GPATF and a cultural
tural exper
exp
since he is the Board-appointed
expert.

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hort breaks as needed. Various typ

During the negotiation period, feel free to take sshort
types of
mes
es are possib
possible. Try
ry to reach good agreement
agreements on at least your three main aagenda
outcomes
items.

Copyright 2012, 2013 by Stephen E. Weiss. Distributed with permission. All rights reserved. (Rev. 11/13)

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This exercise was prepared by Stephen E. Weiss, Associate Professor of Policy and International Business, Schulich School of Business, York University, with the assistance of Bok Nang Young Hoon and
Joe Torzsok. It was inspired by the actual negotiation, but a number of facts and figures have been altered or added for classroom purposes. Copies are available online at www.pon.org, telephone: 800258-4406 (within U.S.) or 781-966-2751 (outside U.S.); or by fax: 617-495-7818. This case may not be reproduced, revised, or translated in whole or in part by any means without the written permission of
the Program on Negotiation, Harvard Law School, Pound Hall, Cambridge, MA 02138. Please help to preserve the usefulness of this case by keeping it confidential. Copyright 2012, 2013 by Stephen E.
Weiss. Distributed with permission. All rights reserved. (Rev. 11/13)

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AN INTER-UNIVERSITY CONSORTIUM TO IMPROVE THE THEORY AND PRACTICE OF CONFLICT RESOLUTION

PROGRAM ON NEGOTIATION AT HARVARD LAW SCHOOL