U.S. Joint Ventures in China: Motivation and Management of Political Risk

by John Daniels, Jeffrey Krug, Douglas Nigh



Since the People's Republic of China approved the Law on Joint Ventures Using Chinese and Foreign Investment in 1979, studies on the subject have focused on two investment features namely the legal-regulatory environment for negotiating and operating the ventures in China and separate case-by-case examples of firms' experiences in the Chinese market. This article presents a study which examines two other aspects of the joint ventures namely motives for these ventures and the perception and management of political risk by investors in the U.S. The reason for exploring the investment motives is that, although Chinese market and regulatory conditions seem attractive, there has been much less investment in China thus far than had been anticipated when the Chinese law was enacted. The second area of examination in the article relates to political risk, because it may be a further factor influencing the small flow of the U.S. investment into China. It is a subject which has been mentioned as a reason for expecting that U.S. investors may be reluctant to commit resources in China.

California Management Review

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