International Joint Ventures in China After Wto Accession: Will Trust Relations Change?

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DEUTSCHES INSTITUT FÜR JAPANSTUDIEN

Harald Dolles & Niklas Wilmking

International Joint Ventures in China after WTO Accession: Will Trust Relations Change?

Working Paper 05/7

Contact author:

Dr. Harald Dolles
Deutsches Institut für Japanstudien E-mail: dolles@dijtokyo.org

Niklas Wilmking
Stinnes Logistics, Germany

ドイツ・日本研究所 Deutsches Institut für Japanstudien German Institute for Japanese Studies

Kudan Minami 3-3-6 Chiyoda-ku Tōkyō 102-0074 Japan Tel.: ++81-3-3222-5077 Fax: ++81-3-3222-5420 homepage: http://dijtokyo.org

Erscheinungsort: Tōkyō 2005

Harald Dolles & Niklas Wilmking International Joint Ventures in China after WTO Accession: Will Trust Relations Change?*)

Page: 1. China’s WTO entry ................................................................................. 5 2. Strategic position of Chinese-foreign JVs .............................................. 6 3. WTO, IJV management and trust............................................................ 8 4. Survey design and fieldwork methodology ............................................ 13 5. Key findings . .......................................................................................... 14 6. Discussion . ............................................................................................. 19 6.1 The interpersonal working environment in Chinese-German IJVs 6.2 The inter-organizational level of co-operation in Chinese-German IJVs 6.3 Strategic implications of China’s WTO entry for Chinese-foreign IJVs 7. Conclusion............................................................................................... 27 References ................................................................................................... 30

*) Our thanks goes to the managers and expatriates in China who provided the data on which this paper is based. Without their cooperation there would be no research findings to report. For valuable comments on an earlier draft of this paper, which was presented at the EAMSA annual meeting 2002 in Bangkok, we thank two anonymous reviewers. A revised version of this paper will be printed as „Trust or distrust: China’s accession to the World Trade Organization and its strategic implications for Chineseforeign joint ventures“ in „Multinationals and Asia: Organizational and Institutional Relationships“ edited by Axèle Giroud, Alexander T. Mohr and Deli Yang, Routledge International Business in Asia series. A full report of the survey is available as „Vertrauen im internationalen Geschäft: Fallstudien Chinesisch-Deutscher Joint Ventures“ [International Business and Trust: Case Studies of Chinese-German Joint Ventures], Bonn, Tōkyō: Stiftung D.G.I.A. & DIJ, ISBN 3-938357-18-0.

Abstract: China’s accession to the WTO, finally realized after 13 years of negation, will gradually open the “Great Wall” which still protects large areas of what will one day become the largest economy of the world. Our paper addresses the nature and functioning of international joint ventures by investigating Chinese-German joint ventures within this context. In general, for international joint ventures in developing countries, trust seems to be one of the key factors for performance. We explored how China’s WTO entry influences the competitive position of partner companies in Chinese-foreign JVs, and their strategic options for coping with that change, depending on their core competences and competitive positions, as well as on their relative bargaining positions.

Key Words: World Trade Organization (WTO), People’s Republic of China, jointventures, trust, strategic management.

1.

China’s World Trade Organization entry

China’s accession to the World Trade Organization (WTO) in November 2001 was an important global event that will have a profound impact on both China itself and on world trade. China’s WTO entry is the culmination of 15 long years of tough negotiations that started with China’s application...
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