EnglishJoint Ventures
Access to Markets
Since many years already, in most industries in China joint ventures with Chinese partners are no longer mandatory for foreign investments. But in many instances they still make sense, in particular if the Chinese partner can provide access to markets that otherwise are hard to penetrate for foreigners.
However, most joint ventures only are viable for a limited period of time and lose their reason of existence once the partners have learned from each other what they need to independently operate the business. Any company considering to enter into a joint venture should keep this in mind and plan for the eventual exit from the very beginning.
We have over the last almost 20 years advised on numerous joint ventures for all phases of their life cycles:
- Introducing joint venture partners
- Formulating joint venture strategies
- Negotiating joint venture agreements
- Restructuring joint ventures
- Dissolving joint ventures
Complex Analysis
Properly structuring a joint venture, however, is complex, and requires a detailed analysis of the total value creation in the intended joint venture. The agreements should cover not only the scope, financing, shareholding and internal organization of the joint venture as such, but also
- Supply The supply of components and materials to the joint venture
- Distribution The distribution of its products
- Transfer The transfer respectively licensing of intellectual property
- Exit Strategies No JV lasts forever; early preparation for its termination is indispensable
- Obligations Non-compete obligations and
- Other Matter Other matters that might be relevant for the particular situation
Properly Structuring a Joint Venture
Issues left out during the original negotiation stage will become very hard to resolve once a joint venture has been established, and should therefore ideally be all addressed in their entirety before binding agreements are reached.