A Foreign Perspective on Potential Problems and Conflicts in Sino-Foreign Joint Ventures

Essay by SVLippstadt08University, Master'sA, July 2004

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1. Table of Contents

1. Table of Contents Page 1

2. Introduction Page 2

3. Problems and conflicts in Sino-foreign joint ventures Page 3

3.1. Different expectations of joint venture partners Page 3

3.2. Technology transfer Page 4

3.3. Localization of content Page 5

3.4. Control Page 6

3.5. Lack of trust Page 7

3.6. High employee turnover Page 8

3.7. Cross-cultural differences Page 9

3.7.1. Addressing problems Page 9

3.7.2. Precedent versus innovation Page 10

3.7.3. Responsibility and motivation Page 11

3.7.4. Performance Assessment Page 11

3.7.5. Leadership behaviour Page 12

3.7.6. Guanxi Page 13

3.7.7. Solutions to reduce cross-cultural differences Page 13

4. Conclusions and Recommendations Page 15

5. Bibliography Page 18

2. Introduction

Since China opened its doors to foreign investment and implemented economic reforms in the early 1980s, growth of international business partnerships in China has been dynamic. International joint ventures (JVs) between foreign and Chinese state owned enterprises have been the dominant mode of entry (Child & Yuan 1996, pp.


This year alone the number of Sino-foreign JVs has increased by 33.03 % (Ministry of Foreign Trade and Economic Cooperation, PRC 2003).

JV failures in China are generally very high and only 44% of all Sino-foreign JVs are considered to be a success (Blanchot & Mayrhofer 1998).

Due to the many failures and problems in Sino-foreign JVs, this report will analyse some potential problems and conflicts that foreign companies might experience in a Sino-foreign JV.

After exploring the potential problems in these international JVs (IJVs) I will provide some recommendations for foreign organizations on how to solve these problems and improve the performance the IJV.

3. Problems and conflicts in Sino-foreign JVs

There are many reasons why so many Sino-foreign JVs have failed or experienced difficulties. The following section takes a closer...