Comments on: China Joint Ventures: Understanding the Intangibles

By: Johnny Ong

Johnny Ong — Mon, 19 Apr 2010 10:04:05 +0000

Very interesting article. Read that Millennium & Copthorne recently lost a lot of money due to the unlawful sale of assets by its JV partner. How did that happen and how could it be prevented?

By: Chris Devonshire-Ellis

Chris Devonshire-Ellis — Mon, 09 Nov 2009 09:31:24 +0000

Thanks Jeffrey. As you know, we’ve been involved in structuring China JV’s for many many years in China, we’ve seen pretty much everything! JV’s can be a very sound investment indeed, however its always the due diligence aspect that often lets the foreign investor down. Trying to rush into JV’s in China is never a good idea, and not paying attention to due diligence is just asking for trouble. With sensible clients as much as our own expertise we’ve been largely able to keep the majority of our JV foreign partners out of trouble, and indeed have advised on many occasions not to proceed. JV’s are a bit like Longfellows’ nursery rhyme: “When they are good they are very very good but when they are bad they are horrid.”

We’re pleased you found the series of use and thanks for your comment – Chris

By: Jeffrey J Davis

Jeffrey J Davis — Thu, 05 Nov 2009 19:40:11 +0000

Great Tips and Advice.

From my experience with our current JV and others, the points about taking any offers of “special help” from the local government officials with a grain of salt is sage advice indeed.

Get it writing and chopped, and check the legality and consistency with other local treatment. Also ensure that any special tax or investment deals your partner may have negotiated are legit, documented and transferable to the new ownership structure. It’s is not uncommon for Industry Classification of your enterprise to suddenly change, once a Western investor joins the ownership structure, which can potentially have massive tax implications.

Best,

Jeffrey J Davis
President & COO, AGY

By: Chris Devonshire-Ellis

Chris Devonshire-Ellis — Thu, 05 Nov 2009 06:41:52 +0000

Ha ha yes thanks. JV’s are entirely appropriate (in fact mandatory) for investments such as these, and they’re not going to go away despite the doom and gloom merchants or people who don’t understand how to negotiate or structure them properly. We’ve seen some poor JV’s over the years, but the majority of ones we’ve been involved with professionally are doing just fine (we often handle the accounting, so we know).

I think this series really writes the common sense book on how to judge whether or not a JV is likely to be a good investment. The guidelines are pretty clear. Good luck in Shanghai guys! – Chris

By: Pluto, Donald & Minnie

Pluto, Donald & Minnie — Wed, 04 Nov 2009 18:32:02 +0000

Excellent timing folks – Disney just announced the biggest JV in China ever at some USD3.5 billion for their new Disneyland in Pudong. Congrats for keeping flying the JV flag when all others lost their heads!