Evolving joint ventures:: A study of Dalian-based joint ventures in the transitional Chinese economy

Abstract

This thesis attempts to explain the evolution and survival of joint ventures in the transitional Chinese economy. Since China 'opened its doors' to foreign direct investment in 1979, the inflows of capital, technology, and management skills via joint ventures have contributed significantly to its economic development. Joint ventures were unquestionably regarded as the most feasible and also the only possible strategy for legitimate foreign direct investment. However, evidence is presented showing that in the 1990s, in line with China's ongoing economic reform, significant changes took place in the country's institutional and economic environment. Hence, the changes in its business environment had a strong impact on China's foreign direct investment. The findings of this study show that China's transitional economy has had a significant impact on the relaxation of state control over foreign direct investment and has seriously affected joint venture partners' initial power relationships and interdependency. The new power relationships between venture partners have driven dramatic changes in joint venture partners' strategies, ownership structure, and operational management. As a result, this study further indicate that the changes in China's business environment, although not the only dominant factor, have exacerbated joint ventures' internal difficulties and further affected joint venture partners' strategic choices, which in turn has led to a rapid evolution of China-based joint ventures. This study contributes to both the theoretical and practical understanding of the evolution of China-based joint ventures as they have adapted under China's economic transition and indicates an additional exit way out to a joint venture's eventual destination, rather than termination or dissolution. This study also offers areas for future research.