Negotiating Joint Ventures in China: A Systematic Approach

Abstract

SummarySince 1978, the successful implementation of the Chinese ‘Open Door Policy’ has contributed dramatically to the growth of direct foreign investment (DFI), in particular through joint ventures. However, foreign negotiators always find Chinese negotiations very difficult. The difficulties arise from the complicated Chinese legal framework, the lengthy negotiation process required and a frequent lack of understanding of guanxi by the foreign negotiators. The Chinese legal framework is a powerful and bureaucratic process which aims to scrutinize DFI. It subtly determines the multistage sino-foreign joint venture negotiation process. Specific strategies are required to successfully manage this process. Their effective implementation requires foreign negotiators to have good guanxi with their Chinese counterparts. Patience is another key to successful negotiation in China. Foreign negotiators must be able to manage their negotiations at both the organisational and the personal levels. Negotiation at the ...