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Back Issues
| Going solo versus getting married | | Print | |
| Nov/Dec 2008 | |||
 Choosing to go it alone with your business operations in China or tying the knot in a joint venture agreement are equally big decisions writes Cecilia Fan.The world is comprised of a mix of single and married people. Deciding to stay single or be in a relationship/marriage is a choice that every individual has to face. So when business executives ask the question: "Should I establish a WOFE (Wholly Owned Foreign Enterprise), or should I set-up a JV (Jointventure)," I often think how ironic it is that the business relationships of the corporate world so closely mirror the relationships between people. Both want to have someone to share life with, while conversely also wishing to have freedom and complete control. There are plenty of negative stories about Sinoforeign joint ventures. The most common reason we hear for JVs failing is because the Chinese side is often "difficult" or "cheats". But to be fair, like most unhappy relationships, blame should not be placed on one party alone. Like the complexity of human relationships, corporations can also make mistakes when they enter a marriage (or a relationship). They tend to think a lot more about what the other side can bring rather than what they can give and they may have only dated their future partner a few times, only knowing each other on the surface. They may not, for instance, have met each other's friends (suppliers, distributors, business allies) and parents (parent company, local government). Sometimes, they get married/enter into a relationship just because they are fed up with being single (too difficult to get things done in China on their own), or even just because they want to have a child (make products or commercial achievements) within a set time frame. Companies enter the China market at different stages in their business cycle, just like individuals in their different stages of life. And just like there is no right or wrong in choosing to be single or married, there is no right or wrong reason to be entering a JV or being in a WOFE. What makes a difference is how you choose, who you choose and how you maintain it. When choosing a partner, make sure you are not under the influence of any fairy tales. Some wait for a princess to knock on their door on a rainy night. And while there might be companies knocking unexpectedly on your door, you should not feel obligated to enter into a relationship just because they turn up on your doorstep. Look around a bit and be realistic. Be prepared to "kiss a few frogs" before you find a decent partner and recognize that while they may be a nice girl/boy they could still be a long way off being a prince or princess. People do not have to be married to stay in a relationship, and this is certainly also an option for corporations. Both the common law system (Australia) and the civil law system (China) allow joint ventures without a formal establishment of the entity. Under this arrangement, the parties can still share profits and losses (if structured correctly) without the "marriage" ritual (establishing a formal joint equity structure). However, like human beings, some corporations are comfortable with a simpler contractual agreement while others may only feel "secure" with the signing of a full joint equity JV contract. Like many marriages/relationships, the JV relationship is certainly difficult in its early days, but in some cases, cracks in the relationship appear later on. If the relationship is terminated in the early days, there is sorrow and there is pain but it is relatively easy and simple compared to a "mid-life crisis" or divorce when a child or children are involved - e.g. patents, brands, distribution networks and R&D owned by the JV. Sometimes both "parents" can lose their temper and the battle may last much longer and be far more bitter than either of the parties desire. For many married people, the ideal life would be having a home to go to when you need it but having your freedom whenever you want. In the corporate world, it works in a similar way. In Danone and Wahaha's original joint venture relationship, Danone restricted Wahaha from setting up any other JV companies in the same industry, while Danone was having "affairs" (setting up competing joint-ventures) with other companies. While Danone may have legally been allowed to do so, Wahaha eventually got fed up and decided to go public with a whole lot of information which was supposed to be kept in the bedroom (the board room). In today's world, singles can enjoy plenty of support as well - from your business alliances and multiple partners. Rather than marrying someone and having different dreams while sharing the same bed, with the exception of a few restricted areas, most companies can choose to remain single (as a WOFE) if they wish, and enjoy the free world. You may enjoy your singles challenges and freedom if that is the path for now, and do not rule out various relationships, with or without a marriage; Vis-à-vis, despite having partners and children today, you may decide to live on your own sometime in future. Just like in one's personal life, a JV (or marriage) should not be a destination, it's a relationship with at least one other person involved. Despite the convenience it brings to life, it requires constant maintenance for the duration of the relationship.■ Hui Yin Bi, the "Echo Wall," welcomes all feedback. E-mail Cecillia Fan at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
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