Long-Term Success of Veolia Waters Joint Ventures with State-Owned Companies - Dissertation Example

The significance of international joint ventures has amplified during recent years owing to the rising number of fresh business establishments as well as the boost in the strategic importance of the joint ventures created (Geringer & Herbert, 1991). International joint ventures can be described as a fresh, autonomous business body created by two or more autonomous business organizations having different national origins. The underlying principle for the formation of joint ventures is to attain competitive benefits by amalgamating the strengths and unique characteristics of two or more dissimilar companies.
Joint ventures amid local organizations or state-owned enterprises in developing nations and overseas organizations have become a common practice for the management of both parties to fulfill their business goals. In principle, such joint ventures provide both the partners a chance to considerably gain from the relative advantages of the other. The domestic partner provides information related to the domestic market, acquaintance with government official procedures and policies; knowledge of domestic labor markets; and, perhaps, accessible manufacturing amenities. On the other hand, overseas partners can provide sophisticated processes as well as product technologies, administration expertise, and admittance to export markets. For both parties, the prospect of merging with another organization to form a new joint entity lessens the capital requirements in comparison to setting up a business alone.
The immense level of interest on the part of foreign companies to set up a business establishment in China is owing to the considerable alterations that had taken place in the economic situation of China during the past twenty to twenty-five years. These alterations commenced with the implementation of the ‘Open Door Policy’ in China in 1978. With the adoption of this policy, overseas organizations were permitted to make investments in China. In 1979, a new law was approved which affirmed that China wanted to broaden its intercontinental economic corporation as well as technological exchange. Post the approval of “The Law of the People’s Republic of China on Joint Ventures using Chinese and Foreign Investment”; China welcomed overseas organizations to set up joints ventures with Chinese organizations in Chinese territory (Zeira et al., 2004). However, by the end of 1990, a large number of overseas investors were displeased with the performance of their joint venture business entities on the whole and particularly with their joint ventures with Chinese organizations (Deng, 2002: Si & Bruton, 1999). Consequently, the study of the various factors that could affect the performance of a joint venture is very crucial to comprehend the long-term sustenance of the joint ventures. Moreover, it is vital to understand what are the factors or attributes based on which, a joint venture is perceived to be successful or not. Thus, it has become imperative to study all the aspects that are necessary to make a Chinese-Foreign Joint Venture a success.