International joint ventures in china after

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It provides a roadmap for avoiding what is probably the biggest and most common mistake that gives Chinese joint ventures such a bad name. Broader Implications and the U.

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There is a long, documented history of this seemingly minor consideration dooming EJVs. Why though would your JV partner do this and how does your JV partner benefit from doing so?

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And, according to our estimates, the effects are substantial, at least over the period in which IJVs accounted for the majority of foreign investment in China.

The Chinese side will intentionally angle to ensure this outcome, usually by offering to concede majority ownership to the foreign investor in return for control over these two key management positions in the joint venture company. The situation today is one of back-and-forth rounds of tariff retaliation, with no immediate path forward for resolving the dispute.

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Figure 1 Joint Venture Formation and Technology Transfer The second effect that we consider is one in which the Chinese IJV partner benefits indirectly from the transfer of technology to the joint venture. Many reasons. These relationships — most often required in high-tech manufacturing industries such as automobile production, electronics, pharmaceuticals, and advanced chemicals — are characterized by explicit technology transfer requirements wherein the rights of the foreign intellectual property holder are often severely curtailed. Why though would your JV partner do this and how does your JV partner benefit from doing so? Foreign investors too often assume Chinese joint venture companies are managed according to the common Western corporate model under which a board of directors has controlling power over the company. Finally, we examine the effect on domestic firms in industries where IJVs are more prevalent. Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. As evidence for the internal technology transfer effect, we show that joint venture firms operate very well along several dimensions of performance.

What sorts of bad things?

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China’s Joint Venture Policy and the International Transfer of Technology