Top Ten Signs Your China JV Is Doomed
Alternative title: You Know You’re in Trouble When the . . .
- JV partners haven’t spoken to each other for 7 years.
- CFO is the wife of the local partner.
- Foreign investor has never visited the JV and forgot what city it’s in.
- Local partner claims he is son of a PLA general.
- Neither party can remember who was supposed to file the application docs.
- Partner’s famous local brand is indeed well known, but is owned by another company.
- Your promise to help your partner expand his stinky tofu franchise overseas is not working out so well.
- Turns out that your $10 million factory is on the site of the future Olympic race walking venue.
- Your partner just got thrown in jail for unauthorized sales of State-owned assets, and the buyer was the JV.
- Your CEO, at a public meeting in
(I used this in my FDI class recently as a way to wrap up the lecture on joint ventures. Two-thirds of the class are Chinese students, who are generally hesitant to laugh at anything the professor says, so in the face of a lot of silence, I was not able to tell if the humor went over well or not. Perhaps some things should remain a mystery.)
It went very well with me…
(still trying to figure out your caption & that award ceremony though)
Add: One of the JV partners has become your client, tells you things are not quite right at the JV, is unable to furnish you with any documents evidencing the establishment or continued legal operation of the JV, but can show you his paper trail for having invested $2 million into it. Then admits that because of many of the factors mentioned in Stan’s post, he took the plunge in the beginning, of course assuming all the “legal stuff” would work itself out, and hey, once everyone starting making money from the JV, who would really be so concerned anyway?
One man’s insanity is another man’s logic.
Hahaha !!!
Well done Stan that made me laugh !!
Todd’s fact pattern is disturbingly familiar, and I’m not thinking of just one case, but many over several years. That sinking feeling when you realize that the venture has serious structural problems . . . eeek. Makes you want to say “Investigation? Let’s put that off for one more day and enjoy our ignorance.”
Stan, just as disturbing is that, even with all the problems inherent in the original screwed-up deals, the parties can have a proclivity to try to work things out, with all sorts of curious permutations of essentially legal novations, yet they mentally mix up the old aspects with the new, and still don’t record too much on paper. Talk about the parol evidence rule!
Well, when I screw up that badly, I don’t want to put the details down on paper either! Maybe they just want to fix the problems as quickly and quietly as possible before their respective bosses figure out what really happened in the first place.
You stole my son of a general line, which is based on a true story. One of our clients invested $500,000 into a joint venture that clearly was without merit. When we asked why he had done that, he said because his joint venture partner was the son of a general. When we asked him how he knew that, he said because his joint venture partner had told him. I’ve been using it as a speech line ever since. Come clean.
I actually never had a JV client with the son-of-a-PLA-general partner. I always thought of this as a perfect archetype but not necessarily something that had every happened in “real life”.
There’s a sucker born every minute.
Strange but true….