what are the cultural difficulties likely to be encountered by a global company from a african economy embarking on a joint venture with a foreign partner in china?what are ur recommendation to enable the joint venture to have the best chance to succeed?
Language is going to be one big issue when it will come to such a joint venture. English as a common language is still not highly developed in China. But it can be overcome by proper planning and manpower hiring and movement.
There are other cultural differences also in the way Chinese handle the business and also the way African companies handle the difference.
One more suggestion can be that the location of such a common office(if any) should be a big chinese city like Shanghai or Bejeing so that the language and other cultural problems can be ironed out due to their global exposure.
A Chinese joint venture is formed as a limited liability corporation under PRC company law. The primary issue in forming such an entity revolves around which party has ultimate control over company operations. Most foreign investors wish to maintain control over the entity, this issue very relevant.
The power to appoint and remove the JV’s representative should be carefully excercised. The side that appoints the representative director will have significant control over operations and the usual practice of conceding the power to chinese side to appoint a key officer or director to another investor is a mistake.
Control over the company seal. The person who controls the registered company seal has the power to make binding contracts on behalf of the joint venture company and to deal with the company’s banks and other key service providers. The power over that seal should be carefully guarded. The local partners will argue that they cannot bring their political connections, into play unless their own people act as the representative director and general manger. This could be misleading and the point should not be accepted at face value.
One thing to be kept in mind that the law in China is bit complicated and generallt favors the local. Hence always have a good chinese lawyer. it will be an good investment if any legal problems arise.