A French Joint Venture Essay Example | Topics and Well Written Essays - 2750 words

A French Joint Venture - Essay Example well, French construction materials company restructured the loss-making state-owned Huaibei Mining Company (HMC) by entering into the joint venture in 1994 and turned the company as profit making company in 1999 by implementing various structural reforms in labor, production, technology, and marketing.(Goodall 103). Entering into joint venture will help to acquire innovative know-how and skills. When China opened its market in 1978, it has become most attractive land for foreign direct investment (FDI) in the whole globe. It is to be observed that three-fourths of FDI attracted by China took the shape of Joint ventures (JV’s). JV offers distinct advantages like reduction in costs. A foreign JV partner may offer capital by way of cash, technology, machinery, know-how whereas the Chinese partner may offer factory land, building, skilled workers, and machinery. Collaborating a joint venture with the state-owned enterprises (SOE’s) in China frequently has raised issues for foreign companies as SOE’s are the distinct form of business entity with a diverse cultural setting. There is less freedom for foreign investors in JV’s as foreign partners have to operate in co-operation with the local SOE’s. By opening the doors for foreign investors, China is transforming to market economy from the centrally planned economy or government controlled economy. Earlier in the joint venture, the HMC Management had failed to keep its promise of granting financial rewards for good performance by employees. As the result, employees lost their faith in the management. HMC HR function was found to be disassociated from business goals and acted only as policemen or administrative function. (Goodall 105). As such, in JV, Lafarge encountered higher extent of complexity due to socio-economic, cultural, political and institutional divergence involved.