International Joint Ventures in China Ownership, Control and Performance

China is the second largest host country in the world for direct investment by foreign companies. Most of this investment has been applied through joint ventures with Chinese firms. Questions of corporate governance, concerning the relationship between the ownership and control of firms, take on new dimensions in the case of Sino-foreign joint ventures. The question of control is bound up with attempts by the Chinese government to ensure that its development policy is well served by both foreign capital and know-how invested in joint ventures. This book throws new light on the bearing that ownership has on joint venture control and performance, first through conceptual refinement, and second through original empirical research. It draws on investigations in over 60 joint ventures and interviews with over 200 managers. A concept of ownership is developed which is suited to joint ventures, where account is taken of non-capital as well as capital resourcing by partners. The ability to predict levels of partner control in joint ventures is enhanced by applying this broader concept of ownership. This more inclusive view of ownership permits a better understanding of the levers for parent company control over international joint venture. The extent to which ownership and control are matched also affects joint venture performance. It appears that Western theory on the subject can usefully be applied to China, despite the differences in context.