Franco-Chinese JV: An Impossible Dream?

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The Chinese and French conceptions of joint ventures are diametrically opposed. So how can this form of cooperation succeed?

Franco-Chinese JV: An Impossible Dream?

Chloe Ascencio is a trainer and coach specialising in Chinese management and business culture. In her book Travailler avec les Chinois, she proposes 8 operational factors to ensure success when doing business in China. Below, she shares a few principles for successful joint-ventures between French and Chinese businesses.

Contrasting Views of the 'Joint-Venture'

The Chinese and French views of a joint-venture can be very different, sometimes to the extent that we wonder if such a form of cooperation could ever succeed. At least three key points of difference include:

  1. Company Status - As the Chinese see it, the joint-venture is only a temporary stage, as the joint company will not be independent in the longer term. They consider it part of the Chinese company. For the French, on the other hand, this is a legal entity in its own right, which should be both stable and permanent.
  2. Technology Transfer vs. Profit - While the Chinese partner may see a joint-venture as a vehicle for technology transfer and disregard initial profitability, this contradicts the French partner's intention for a viable, profitable, operation.
  3. Profit Distribution - The Chinese view that the balance of power on-site  should determine how profits are distributed, not the percentage of the shareholding, is contrary to the French legal view.

Navigating the Balance of Power

The French adopt a "chess game" type approach based on controlling the partner with contracts. For their part, the Chinese adopt a "go game" approach by capturing all of the strategic positions, particularly in the sales posts, to ensure that real power lies in their hands.

The French perception of the balance of power is negative. When the partner takes advantage of the current balance of power to renegotiate the contract, this is seen as completely unacceptable. However, the notion of a balance of power is seen as normal and positive among the Chinese who accept its ebb and flow and its constantly changing situations. This is the Taoist view of continual change.

Making the Joint-Venture Work

Joint-venture success between French and Chinese companies is not impossible. However, we must recognise the challenge of reconciling two opposing ideas of efficiency: the French 'how' and the Chinese 'why'.

Creating a win-win in this situation requires effort and understanding on both sides:

  1.     The partner's roles in the deal must be mutually beneficial.
  2.     The partners must take time to forge a personal relationship.

A tool like Akteos' Akteos Nomad' Profiler can be used to highlight the cultural differences between yourself and others, particularly concerning dispute resolution. Familiarising yourself with this will help you to find solutions to promote good relationships and succeed together.

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