Localization: A Tale of Two Joint Ventures
A solid localization strategy backed by the requisite competencies and resources is an indispensable component of a foreign company’s China strategy. This logic is simple to understand, and few, if any, foreign executives will argue against it.
On ground, it is not uncommon for foreign executives to intuitively channel their localization efforts on driving the corporate performance of the joint venture. This is a necessary first step, and it is a very important one too since this is where the legal rights and economic interests of the foreign company reside. However, there is a second step, and this is where some foreign executives are found wanting – insufficient localization competencies and resources are channeled towards managing the issues relating to Chinese partner and culture. Many foreign executives are aware of this, but not many will, and can, step up to the task in this regard.
This paper is based on the actual case studies of two Hong Kong listed investment holding companies over a period of 7 years.
In the interest of discretion, the identities are not revealed and we have instead adopted the themes of “Mountain” and “River” for names of the two companies, Chinese partner and JVs in China.
Mountain and River (the “Players”) competed in the market data and information industry in China through their respective joint ventures and Chinese Partners but delivered contrasting corporate performances during the period under review.
Again, the Players’ actual industry has not been identified in the interest of discretion, and we have adopted the market data and information industry for this case study.
The market data and information industry is similar to the Players’ actual industry and is therefore a good proxy for the purpose of this case study.
The case study covers twelve aspects of the Players’ strategy and development as follows:
Foreign shareholder resources
Chinese shareholder/partner resources
We are strong advocates of delivering data-facts-based advisory service, and this case study is therefore backed by information from the Players’ listing prospectuses, annual reports, press releases and Hong Kong Stock Exchange filings.
This paper is prepared for general informational purposes, and it does not constitute any advice whatsoever. Further, the reading of this paper and any subsequent discussions do not form any contractual relationship between us. We therefore disclaim all and any liabilities with regards to any actions on your part based on the content of this paper.
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