An international joint venture (it is most often) is a separate legal organizational entity in which at least two partners participate economically, geographically and legally independently of each other. The joint venture may be formed entirely on a new basis, or be the result of the merger of several existing divisions within different companies. It is currently one of the forms of alliances most used in internationalization strategies, particularly in emerging countries, but also one of the strengths of the most complex alliances. It is very important to note that decisions must be made unanimously.
The main objective of a joint venture is the pooling of resources and expertise to manage a project which is impractical for a single firm. For a joint venture between the two partners, the agreement should be based on a balanced sharing of risks and benefits and commitment and mutual trust. It should also take into account the reliability of the partner (management style, efficiency, experience situations of cooperation, competition risk in return).
Sharing of resources and expertise is the reason for the creation of a joint venture. However, there are reasons which are probably less strategic and more directly related to environmental constraints, which can explain the creation of a joint venture. Environmental constraints can be defined as regulatory factors, institutional and competitive partners that will entice, or compel them to resort to the joint venture as a form of investment in a foreign country.
[...] The main objective of a joint venture is the pooling of resources and expertise to manage a project which is impractical for a single firm. For a joint venture between the two partners, the agreement should be based on a balanced sharing of risks and benefits and commitment and mutual trust. It should also take into account the reliability of the partner (management style, efficiency, experience situations of cooperation, competition risk in return). Sharing of resources and expertise is the reason for the creation of a joint venture. [...]
[...] Indeed, through Jinjia Investments joint venture between Danone Asia Singapore Pte Ltd. Peregrine Investment and Hong Kong, which Danone is the controlling shareholder), Groupe Danone and Peregrine invested $ 70 million for the majority stake in five joint ventures . In the wake of the financial crisis in Asia, Danone bought out Hong Kong Peregrine which went bankrupt. This allowed it to hold a 51% interest in 39 entities of the joint venture. On the Chinese side, the capital of "Hangzhou Wahaha Group Co. [...]
[...] The reasons for the creation of a joint venture are far from being just strategic. Consider the following example: X Company (foreign company) takes the initiative and contacts a potential partner (local company) to exploit an opportunity. The reasons for this initiative are: - Risk sharing experiences (knowledge of a product / market knowledge), resources and skills - Sharing governmental regulations or environmental requirements: specific barriers, tariff and non-entry to a country In contractual terms, there are two options for the joint venture, it may be limited to a single joint operation or extend to a long-term cooperation between the parties. [...]
[...] On December the Intermediate People's Court of the 8th Agricultural Division of Xinjiang Production and Construction Infantry took a decision on a complaint that it had been seized, and was presented by Jinjia Investment, Group Danone, the latter accusing Zong, the President of Wahaha, of harming the interests of the company. The plaintiff's complaint was dismissed and Danone had to pay RMB 24,656 in legal fees. On 25 June 2008, the Shenyang Intermediate People's Court rendered its first judgment. The court confirmed that Qin Peng (China director for Danone Asia) violated the non-competition clause as director and sentenced him to be dismissed. [...]
[...] As explained above, the consequences of the dispute had already been felt 2 yrs before the rupture of the joint venture, and the sales of Wahaha were no longer consolidated since 2 years. We observed a significant decrease in the profit of associates sold or held for sale and therefore consolidated the net income between 2007 and 2008. This was partly due to the end of the partnership with the company Wahaha, and the result is no longer consolidated since that time. [...]
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