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

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來自 The Chinese University of Hong Kong 的課程

China Strategy

21 個評分

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The Chinese University of Hong Kong

China Strategy

21 個評分

課程 2（共 4 門，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.

從本節課中

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

與講師見面

Prof. Xufei Ma
Associate Professor, Director, Center for Entrepreneurship
Department of Management
Dr. Frank Ng
Lecturer
Department of Management

I think finding joint venture partners is difficult.

It's difficult because to be successful,

you need to have, as a foreign company,

shared objectives, shared goals with the partners.

The JV partner needs to bring some access to the market,

especially to the Chinese market.

Probably some access to the local talents, also.

So it's not only market access, it's not only about money and objectives.

It's also about the workforce and the HR, the human resources.

So for me, these are the three, let's say, most important criteria.

And if you look at the objective, it's not always easy to align the objective.

Because a lot of, let's say, American or European companies may have a very strong,

let's say, policy in terms of their profitability objectives.

And being profitable of a relatively short period of time is

quite often an objective.

While some of the potential Chinese partners might,

on the contrary, have a longer time horizon.

And more emphasis on gaining market share, commanding technology,

investing in fixed assets, as opposed to being profitable in the short term.

Simply because if financing is less of a problem for

Chinese companies, obviously profitability is less important.

I think this is changing, this is definitely changing.

But the notion of time and the alignment of time horizons between,

let's say American firms, European firms,

and Chinese firms might not be very easy.

I think access to market is also a key criterion for choosing a JV partner.

And quite often JVs are meant to simply break the wall

[LAUGH] of difficult Chinese markets.

So partnering with a Chinese company is having a JV simply means access

to the market.

So then European and American companies need to be very careful to

choose the right partners that is actually giving access to the market.

And they need to use, let's say, a lot of market research.

And pay careful attention to the trust of the partner before

striking a deal to make sure that it's actually bringing access to the market.

So I would definitely recommend looking at the subsidiaries of

the first tier state-owned enterprises for newcomers to the market.

Simply because they will bring access to the supply chain of their mother company.

This is a typical pattern, just to name one.

Now looking at the way to manage those JV.

I think managing a joint venture is something that takes a lot of management

time, a lot of management attention, and should have dedicated people to do so.

It's not like managing a company.

Managing a joint venture is a different, and it's not specific to China,

by the way.

But Chinese companies can be complex to handle.

And Chinese managers can be complex to handle.

So it takes serious attention.

So for me, the most important points are corporate governance.

So being very clear in the joint venture agreement as to

how decisions are made and which decisions are made by whom.

Protection of intellectual property is key simply because

protection of intellectual property still is an issue in China.

And so in a joint venture, companies need to be very careful what they put in

a joint venture and what they don't put in the joint venture.

And if they don't put in the joint venture, it should be off limits or

ring-fenced to the Chinese partner to avoid

any potential conflict or confusion in the future.

That takes day to day management, tight day to day management.

It's not signing a contract and

then hoping everything will go along the lines of the contract.

It does not happen in the Western world, it does not happen here either.

So it has to be managed every day, and

in some cases it also means that

conflict resolution needs to be in place.

Maybe organized beforehand,

just to have some kind of a process when problems happen.

One last point on the joint ventures, China is a dynamic market.

So entering a joint venture is not forever.

And so companies need to be prepared to break the joint venture.

Simply because at one stage you want to go to a different market or

you're not happy with your partners or

the technology level of the partner is not sufficient as compared to competitors.

So you want to break the joint venture, and

breaking the joint venture means that it is provisioned in the initial agreement.

And people should not be shy in breaking what has been carefully built,

sometimes over a long period of time.

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