This article was written for, and first appeared in the May
2012 issue of China Law & Practice, a Euromoney
publication.
Since the 1980s the joint venture was the most common
route for structuring foreign direct investment into China. Two
decades later, are joint ventures still the right
choice?
When China began opening up its economy to foreign direct
investment (FDI) in the 1980s, precautions were taken that
compelled foreign investors to partner with Chinese, usually
state-owned, counterparts. This structure was heralded as a win-win
situation and there is logic behind the joint venture (JV). From a
Chinese perspective, a JV allows for the acquisition of foreign
technology, know-how, insight into international management
practices and access to foreign markets. For the foreign partner,
the JV promises benefits stemming from the resources of the Chinese
party and its knowledge of the market, as well as familiarity with
local culture and business practices.
