How to create successful Sino-foreign business partnerships in China

Forming business partnerships through joint ventures (JV) and strategic alliances (SA) remains a compelling way to do business in China. Many firms appear to prefer partnerships over the more traditional acquisition model. Partnerships offer the benefits of sharing resources, knowledge and skills at a reasonable cost, while limiting risks and regulatory red-tape.

 

Creating successful Sino-foreign business partnerships

 

But what key factors are required to ensure a successful Sino-foreign business partnership? And what are the common pitfalls to avoid - after all, two thirds of business partnerships end prematurely within the first two years of their inception. 

 

We commissioned the Economist Intelligence Unit (EIU) to investigate further. The EIU canvassed 300 senior executives worldwide, and their resulting report highlights the challenges both foreign and Chinese companies have. These range from defining and agreeing to a strategy and selecting the right partner, to reaching an agreement on the key terms of the partnership (including objectives, activities, respective contributions, governance, profit contribution and length of partnership) and operating the JV / SA.

 

That said, business opportunities for foreign firms in China remain good. Interest in forming JVs and SAs will continue to grow, with 75% of survey respondents advising that they are planning on entering into a new business partnership in the country.

 

Find out more in the EIUs report here, including why companies are pursuing Sino-foreign partnerships, what key attributes they seek in their business partners and how they address the various challenges encountered. 

 

Gaining a competitive advantage

 

There is no ‘silver bullet’ to partnership success; like mergers and acquisitions (M&A), each partnership is complex and unique.


However, we have identified 7 key success factors for setting up and operating partnerships. These best practices, critical success factors and pitfalls will set you on the right path to create and manage partnerships better than your rivals which can become a vital source of competitive advantage for you.

 

Download: China Deals - Creating successful Sino-foreign business partnerships in China


What are your pros and cons of setting up a partnership with China? Share your thoughts below or schedule a meeting to discuss your situation in confidence.

Philip Bloomfield | Deals Partner
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