Joint Ventures, Strategic Alliances Remain Attractive Ways to Do Business in China

While there has been much coverage of China’s slowing economy, as well as increased scrutiny of foreign companies and the country’s rising labor costs, a new report finds that joint ventures and strategic alliances remain attractive ways to do business in China for both Chinese and foreign companies.

Seventy-six percent of foreign respondents and 70% of Chinese respondents surveyed are planning to enter into a partnership (i.e. joint venture or alliance) in China.

A significant majority describe the prospects of a partnership in China as “good” or “excellent”. Such business partnerships rely on the sharing of resources and are therefore less risky and costly than wholly foreign-owned enterprises. Sometimes they are the only viable option.

“Courting China Inc.: Expectations, Pitfalls and Success Factors of Sino-foreign Business Partnerships in China” is a report commissioned by PwC and written by the Economist Intelligence Unit (EIU). The authors surveyed 300 senior executives from China and eight other geographies, across 20 industries.

“It is essential that the partners’ strategic objectives for the JV are aligned from the outset,” says Katy Spooner, Transaction Services Leader for PwC Southern China. “An appropriate management structure, clear contributions from the partners and the full support of both Boards will maximise the likelihood of a successful venture.”