A Joint Venture In China Is There Anything Worse? · A Joint Venture In China Is There Anything...
Transcript of A Joint Venture In China Is There Anything Worse? · A Joint Venture In China Is There Anything...
Partner Lior Aviram – Head of Hi-Tech and Venture Capital Partner Michal Tzhori – Head of China Practice
A Joint Venture In China Is There Anything Worse?
01 Joint Ventures – the
History
02 03
04
Round Trip – JV to
WFOE
JV – What Can be
Worse?
Common Business
Structure recently
05 Successful Joint
Ventures
Joint Venture – The History
July,1979
• Sino-foreign Joint Venture Law published
1983
• Implementation rules of Sino-foreign joint venture law introduced
1983-2001
• 1986-WFOE allowed
• Coastal and riverside areas and cities gradually open
2001-2016
• China’s accession to the WTO
Round trip: JV to WFOE
JVs Domination
• Permitted since 1979
• No-other-choice basis
WOFE’s birth
• 1986 China has published Foreign-invested enterprise law
• Nonetheless, only after China’s accession to WTO has WOFE become popular in China
Why WOFE?
• Independency and sense of control
• Business cultural gaps
• Profits are all yours
• Better control over IPR
Why JV?
• China Market
• We–understand-the-value basis
• Infrastructure and knowledge of the Chinese market
• Lack of experience in the Chinese market
ISRAEL
CHINA
Marketing/ Commercialization/Assembly
Land, basic facilities, human resources, channels, go to market
Check this Business Structure
Injection of IP, know-how, skills and methods
Investment in R&D in Israel against equity
ISRAEL
CHINA
Marketing/ Commercialization/Assembly
Land, basic facilities, human resources, channels, go to market
Check this Business Structure
Injection of IP, know-how, skills and methods
ISRAEL
CHINA
When you rule out this structure
When you DIY
ISRAEL
CHINA
Operation costs
Management of local staff; cultural differences
Regulation, relations, channels
Successful Ventures
Guangzhou Honda
Shanghai Volkswagen
GMCC Meizhi
Guangzhou Procter & Gamble
China HP Priortech
Partner Selection
Carful Structuring
Modular Technology Sharing
Mutual Trust
Nominate your Executive
Active Involvement & Supervision
Exit Strategy
Preconditions to a Successful JV
JV
Foreign Partner China Partner
JV - Advantages and Disadvantages
- Sometimes it is Mandatory
- Prerequisite for an investment in IL
- Lower entry barriers
- Cost sharing
- Chinese partner (knowledge of the local market, relations, ability to manage local talents)
- Streamline regulatory processes
- Stronger protection of the JV’s IP
- Must plan in advance; align interest and goals; reach common targets
- If not enough managerial attention you might lose control
- Loyalty of talents
- Easy to rely on partner and loosen supervision
- Challenging decisions making process
Profit sharing
- Might compromise your IP
Shibolet China Practice
Michelle has over 20 years of legal experience in Israel and China and has established the China
practice of Shibolet & Co. in 2005;
Michelle specialized in guiding foreign clients through all legal stages of doing business in China,
as well as assisting Chinese clients in their investments in Israel.
Industry Experience: General Manager of FOX-WIZEL CHINA WFOE 2007-2011,
Chief Representative (Rep Office) and Legal Representative (WFOE)
of a leading US Importer in the fashion industry 2011-2013
Lior Aviram
Head of High-Tech
& VC Practice
Lior has vast experience leading high-end, complex, cross-border transactions. He is recognized as a leading expert in venture capital and strategic investments, and in the structuring and establishment of venture capital funds. He also specializes in complex, cross-border M&A and capital markets transactions, having been a lead counsel in some of the most innovative transactions in the Israeli market. Lead counsel in some of the most innovative transactions in the Israeli market. Guiding Israeli and foreign clients through all legal stages of doing business in China, and in assisting Chinese clients in their investments in Israel. One of only five Israeli lawyers listed, as a ‘leading individual’ in high-tech, start-ups and venture capital – Legal 500
Michelle Tzhori
Head of China Practice