Earlier this week, I was talking with a client regarding a potential China Joint Venture (JV). In our initial conversation, I told him of how difficult and yet important it is to do joint ventures correctly from a legal perspective and of how negotiating joint venture deals can be so time consuming and then had to run off to a meeting.
A few days later, we resumed our call.
In our second call, the client told me that he had since spoken with a high school friend of his, who is the General Counsel for a large international auto parts manufacturer. The client told me that his friend had told him that for a Joint Venture to work in China, the American company would need to be able to have someone in China pretty much all the time to monitor the day to day goings on at the Joint Venture. Without this, said the General Counsel, the Joint Venture would be doomed to fail. The client asked me if I agreed with that and I immediately said “yes.” I then relayed how co-blogger Steve Dickinson and are of of the view that the successful China Joint Venture nearly always involves close monitoring of the joint venture by someone who both knows China and can be 100% trusted by the American joint venture partner. Without that, the chances of a joint venture working out for the American company are slim.
The Foreign Entrepreneurs in China blog recently did a post, entitled, “A Joint Venture Survival Guide. 22 Facts and 22 Practical Tips.” This post includes the need to monitor and a whole lot more. If you are in a Chinese Joint Venture or contemplating entering into one, you absolutely should check out that post, and to whet your appetite for it, I list my five favorites from it below:
For more on China Joint Ventures, I again urge you to check out the Foreign Entrepreneurs’ Post and also the following:
For more on what it takes to succeed with a China joint venture, check out the following:
What do you think?