RESEARCHPAPERSINMANAGEMENTSTUDIES.pdfVIP

RESEARCH PAPERS IN MANAGEMENT STUDIES ‘SINO-FOREIGN JOINT VENTURES’ VERSUS ‘WHOLLY FOREIGN OWNED ENTERPRISES’ IN THE PEOPLE’S REPUBLIC OF CHINA Daniel Yan and Malcolm Warner WP 11/2001 The Judge Institute of Management Studies Trumpington Street Cambridge CB2 1AG 0 ‘SINO-FOREIGN JOINT VENTURES’ VERSUS ‘WHOLLY FOREIGN OWNED ENTERPRISES’ IN THE PEOPLE’S REPUBLIC OF CHINA DANIEL YAN and MALCOLM WARNER Judge Institute of Management Studies University of Cambridge United Kingdom October 2001 Keywords: Joint Venture; Wholly Foreign Owned Enterprises; China 1 I. THE ONGOING DEBATE 1.1 Introduction Sino-foreign joint ventures (SFJVs) used to be the prevalent mode of operation for foreign companies in China. Since 1997, wholly foreign-owned enterprises (WFOEs) have begun to outnumber SFJVs. Factors such as Chinese partners’ competence, joint venture (JV) management control, and frustration from JV failure examples, have been cited as reasons why a strict adoption of WFOE for conducting business in China might be preferable. This article argues that SFJVs and WFOEs have been influenced by a number of ongoing changes, for example, government policy toward foreign investment, ind