Hastings International and Comparative Law Review


The Chinese Government now encourages equity joint ventures to attract foreign investors. There is some uncertainty on the part of investors, however; while large numbers of businesses are seeking joint venture contracts, current investors are considering leaving China. This Article provides an assessment of the status of equity joint ventures for the foreign investor. It first considers the cultural context in which agreements with Chinese entities must be approached. The author asserts that a potential investor must try to understand China's deep-rooted reservations about Western thought and practice and the pervasive influences of Chinese tradition. The author then discusses the practical aspects of structuring the joint venture to conform with written and unwritten rules in the People's Republic of China. In addition, after formation of the joint venture, the investor must consider management concerns such as labor, quality control, and marketing. In conclusion, the author points out that China does indeed have many drawbacks for potential investors. Those willing to exercise patience and planning, however, may be richly rewarded.