3.4b Joint Ventures (Expert Sharing by Ms Helen Cheng, Equity Partner, Zhong Lun Law Firm)

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En provenance du cours de Université chinoise de Hong Kong

China Strategy

14 notes

Université chinoise de Hong Kong

China Strategy

14 notes

Cours 2 sur 4 dans Specialization Doing Business in China

This course is designed to help you, as a strategist of a foreign company, better understand how to develop your China strategy. Specifically, after studying China’s changing strategic landscape, you will focus on mastering three strategic issues: who – the major players in China, how – the entry modes, and where – the location strategy for your China business. This course is aimed to deliver updated knowledge and real experiences of developing China strategy.

À partir de la leçon

How To Enter China: Entry Mode Choices

The success of doing business in China is influenced by the choices of entry mode. This Section explores the advantages and disadvantages offered by different entry modes, and also the different resources and time commitments required. We also introduce cross-border E-commerce, an increasing and emerging new entry mode. What is entry mode? Why are different entry modes chosen? What are the pros and cons of each entry mode? How do foreign firms choose entry mode? What is cross-border E-commerce in China and how do foreign firms use this new entry mode?

3.4a Key Issue: Partner Selection3:58

3.4b Joint Ventures (Expert Sharing by Ms Helen Cheng, Equity Partner, Zhong Lun Law Firm)2:52

3.4c Joint Ventures (Expert Sharing by Mr Denis Depoux, Senior Partner of Roland Berger)6:14

Rencontrer les enseignants

Prof. Xufei Ma
Associate Professor, Director, Center for Entrepreneurship
Department of Management

Er, sure. Joint venture is another big

topic for a lot of our matters.

From a lot of cases we have observed,

I think, very critical issue is from

the early stage before you were

even when you start to discussing

joint venture structure for China,

you have to consider future exit,

or kind of that, for both parties.

And because for joint venture, normally

for the short term will be beneficial,

will create a win-win situation

for both parties.

However, in the long-term, you know,

with the development of the market

under the joint venture,

their shareholders or the partners,

they may have different thinking.

Either the foreign company or the

Chinese company, you know, that they

may not have strong incentive to stay

with the joint venture.

Then we have observed quite

regular thing often happened.

So, you do have to consider, you know,

the one situation is the joint venture

would go on for very long-term like

20 or even 80 or longer years.

On the other hand, you have to consider

joint-venture doesn’t work at

a certain point. You have to terminate

the joint venture. And each party should

reserve their option to, you know, buy out

shares or exit from the joint adventure.

We have seen some cases, you know,

when they join partner, when they want

to get married, they were very happy.

They never consider when they broke up,

what will happen.

And then a few years later, you know,

they'll have some problems, serious problem

in connection with the operation of the

joint venture. When there is no

stipulation in that contract, they are

fighting with each other and a lot of

staffing, labor and asset issue.

That is, you know, it's really muddy water.

So, they have to consider the

long-term goal of the joint venture.

And also after the formation of the

joint venture, I think, for the

multi-national companies, it’s very

critical for them to get real involvement

in the operation of the joint venture.

So, in the JV Agreement, we really

advise our client to have authority to

send the general manager, you know,

who has daily supervision roles to

supervise operation of the JV,

to ensure that the development of

joint venture just, you know, track with

the initially designed target.

And also to which degree you're going to

transfer your IP to the joint venture.

And also for the jointly made intellectual

property, who is to own the ownership.

That is another big issue. All has to be

delicately designed and then considered

before the formation of the joint venture.

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