Lessons for Joint Ventures in China

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Lessons for Joint Ventures in China. Danone and Wahaha Case Study.

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Lessons for Joint Ventures in China
Danone and Wahaha Case Study

8/17/2012

MSc International Management programme Management across Cultures Prague College

Lessons for Joint Ventures in China. Danone and Wahaha Case Study.

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Contents
1. 2. 3. Objectives and scope. ........................................................................................................................... 3 Joint Venture: definition and relational factors.................................................................................... 4 Comparison of French & Chinese cultural models. Hofstede’s model ................................................. 5

4. Short introduction to Chinese culture. The social and historical description of Chinese culture and Confucianism................................................................................................................................................. 8 5. 6. 7. 8. Case study ............................................................................................................................................. 9 Lesson for the future........................................................................................................................... 12 Conclusions ......................................................................................................................................... 13 Bibliography ........................................................................................................................................ 14

Lessons for Joint Ventures in China. Danone and Wahaha Case Study.

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1. Objectives and scope.
The aim of this paper is to investigate and analyze the lessons for joint venture in China.

First, the author decided to define joint ventures and analyze relational factors. The next step was to compare Chinese and French culture using national context provided by Hofstede’s model and its implications for organizations. Then, the historical and sociological description of Chinese culture was introduced. Further, the case study was described. And finally the lessons to be learnt were investigated. The paper is finished by conclusions. Above mentioned points will be discussed taking into consideration the case study of Danone and Wahaha joint venture. The basic information about joint ventures theory will be provided first.

Lessons for Joint Ventures in China. Danone and Wahaha Case Study.

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2. Joint Venture: definition and relational factors
Harrison (2010, p. 216) describes joint venture as “an agreement between two or more companies involving joint equity ownership and control. Because a degree of control is involved, it may also be classified as a form of FDI”. He states that this type of arrangement is used as an international entry strategy where full ownership is considered too risky or is not allowed in the host country, or where for some other reason the parties want to retain their separate legal entity. In China, an international joint venture is defined as an enterprise established jointly by one or more foreign/regional companies, enterprises or other economic organizations or individuals and one or more Chinese companies in accordance with the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures (Li et alia, 2008). As per Zhang & Van Deusen (2010, p.83), the parent companies jointly exploit their combined resources to indentify and create capabilities and core competencies to capture market opportunities mainly on Chinese market. Chinese partner provides knowledge about government laws and customs, along with networking relationships, while foreign firms provide financial resources and technological and management expertise. In the literature relational factors like trust, commitment, cooperation, and satisfaction are present. Wilson and Brennan (2008) explored the effects of...
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