China has become one of the most attractive destinations for foreign direct investment (FDI) in the world. The Chinese government is still imposing regulations on certain industries in which foreign firms have to establish through a joint venture. Joint ventures with a Chinese partner are considered to be a great risk due to the environment they operate in and also due to cultural aspects and many joint ventures end with a buyout. The aim of this study is to analyze what factors firms need to be aware of when entering into a joint venture and how to avoid or overcome the problems that arise. The essay is written using a qualitative method. The study is partly based on a literature study, partly on primary sources. The primary sources consist of five interviews with representatives from companies who are either currently in a joint venture or have previously been in one. Six interviews with experts within the field have also been carried out. The essay is strongly influenced by the contingency theory which argues that the performance of a company depends on the environment the company is operating in. The problem has therefore been tackled through describing the specific conditions that a foreign firm will meet in China. Joint ventures with a partner from another country involve risks but can also be of great advantage if they are run in a good way. How to run the joint venture might differ between firms but some factors seem to be common for most firms. It is important to be careful which partner to choose and to do a due diligence in the beginning as well as having a letter of intent written down in the initial stages. Operating in China might bring unusual challenges so it is important for the foreign firm to have knowledge about the Chinese culture and the Chinese laws and regulations before establishing in China.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:hik-1824 |
| Date | January 2009 |
| Creators | Andersson, Linda |
| Publisher | Högskolan i Kalmar, Handelshögskolan BBS |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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