A joint venture has two or more parent companies that should in theory work together
towards the same common goal. However, a UK and Chinese firm often have
different priorities for establishing the joint venture. Glaister and Wang (1993)
conducted a survey of 21 UK companies which have established joint ventures in
China and found that ‘faster entry to market’ and to ‘facilitate international
expansion’ were ranked as the two most important strategic reasons. Among the key
reasons for Chinese firms are technology transfer and management expertise.
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Western firms influence on the joint venture can lead to changes in Chinese business
practice. For example, an increase in management training and development, which
has only come about since the 1980’s. Western firms bring added competition to
Chinese state owned enterprises. Adaptation to a changing business environment is
something Chinese firms need to learn quickly if they are able to compete with the
foreign counterparts.