Furthermore, given the importance attached to intellectual property in today’s business world, it is vital that foreign investors take adequate steps to protect their IP from appropriation. Money? The first thing you should know is that Chinese companies will often use the false promise of a joint venture to entice foreign companies to provide them with the foreign company’s technology. He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network. Leadership Styles and Organizational Effectiveness in Chinese‐Japanese Joint Ventures. I also like them because they tend to be one of our most lucrative corporate matters we do. Equity joint ventures are the second most common manner in which foreign companies enter the China market and the preferred manner for cooperation where the Chinese government and Chinese businesses are concerned. Can our own businesses compete with our JV? Before you do a joint venture with anyone you should make sure the two (or more) of you are truly on the same page regarding what will go into the joint venture and how it will operate once formed. These include (but are not limited to) access to land, distribution channels, business licenses, labor, networks, and Communist-party support. There is an old Chinese saying that applies to any sort of partnership without a meeting of the minds: “same bed, different dreams” (同床异梦). There is a long, documented history of this seemingly minor consideration dooming EJVs. Since joint ventures became feasible in China in the 1980s, many overseas companies chose their joint venture partners poorly. But just because there is good potential for a profitable China Joint Venture and you are working with a putative China joint venture partner that is sincere and honest does not mean doing the joint venture will make sense. As such, strategic JVs can bring success and mutual benefit to both partners. It’s a venture that belongs to one party, someone with a lot at stake and an incentive to make it work. JVs help businesses achieve their common objectives and gain insights and entry in unknown markets. The joint venture was started in … Restaurants, bars, building and construction, car production, and cosmetics are just a few of the industries in which foreign companies would need to seek a joint venture with a local partner. Are we losing joint venture legal work because of this reputation or do we get more such work because people believe that if we give their joint venture the go-ahead it really is as good as they think it is. It provides a roadmap for avoiding what is probably the biggest and most common mistake that gives Chinese joint ventures such a bad name. Joint ventures can be a risky proposition, but they can be a valuable tool for companies hoping to crack the Chinese market, if done properly. Once power over operations is out of your hands, it becomes very difficult to run a successful partnership in China. Know-how? It’s easy and hopeful and exciting to start something, but challenging and often painful to finish it. Goldman Sachs will buy out its China joint venture partner to make it the most advanced foreign bank to take full ownership of a mainland securities business. While many companies are shying away the Joint Venture structure due to the large amounts of inherent risk, it still has several advantages. The article then goes on to note how “thoroughly vetting your joint venture partner” will “dramatically increase your likelihood of success,” but states that most China joint ventures fail because the foreign partner made the “fundamental mistake” of believing its 51% ownership gave it effective control over the joint venture: Foreign investors too often assume Chinese joint venture companies are managed according to a common Western model, under which a board of directors has controlling power over the company. The contract must comply with the Law and Regulations of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures. The case is a highly visible test of China’s commitment to rule of law in matters involving foreign business. Royal Dutch Shell Plc has acquired full control of one of its gas station joint ventures in China as the oil major doubles down on the fuel retailing market in the world’s second-largest economy. All ventures are risky, because they involve change and the unknown. With China’s economy in a downturn and so much uncertainty regarding the future of US/China (and even EU/China) relations, our China business lawyers have of late been seeing a massive uptick in companies looking to do China joint ventures “to share in the risk.” When done right, China joint ventures do share risk. For companies entering a new market, the risk of borrowing additional funding or seeking outside investors is diminished. The Chinese side will also often claim they cannot use their political connections unless their own people are the representative director and general manager. And then the odds are good that in 3-4 years you will pay us another $50,000 or so to shut it down. It currently holds 51% in the venture. The size of the market in China and the speed at which the national economy has developed over the last 20 years makes it an obvious destination for investment. He was named as one of only three Washington State Amazing Lawyers in International Law, is AV rated by Martindale-Hubbell Law Directory (its highest rating), is rated 10.0 by AVVO.com (also its highest rating), and is a recognized SuperLawyer. The foreign company believes it owns part of the China joint venture even though it does not. What mechanisms will we use for reaching JV decisions? He most commonly speaks on China law issues and is the lead writer of the award winning China Law Blog. This is particularly important given China’s ‘first-to-file’ approach to IP management. Can our own businesses do business with the JV? A change in leadership styles is a key characteristic of joint ventures. Depending on the sector in question, a JV may be only way to register in China if a certain business activity is still controlled by the government. In many cases, technology transfers are effectively required by China's Foreign direct investment (FDI) regime, which closes off important sectors of the economy to foreign firms. The common Chinese company response will be something like “we will work out any issues among ourselves and if that fails, we will have a special meeting to try to resolve everything. Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed Dan regarding various aspects of his international law practice. Our law firm has handled at least a dozen of these matters where our ten minute search revealed there never was a joint venture. JPMorgan took 71% of … However, China's strict commercial laws mean that joint ventures often have to be entered into despite the risks. 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