International Joint Venture

Introduction

As companies look to expand their reach globally to enter new markets or find savings, a common strategy is to find a local partner in another country and form an international joint venture. When done well, international joint ventures can dramatically shorten the timeline and expense in developing an international market or supplier base. However, if not correctly executed, an international joint venture can be an expensive misadventure that can potentially damage the home company’s operations and brand.

International Joint Venture Agreement

The international joint venture agreement represents the understanding of each partner’s respective rights, obligations and role within the venture. In addition, the agreement should address the ownership of intellectual property – especially if new intellectual property will be created by the joint venture. As such, the international joint venture agreement requires careful review and drafting by experienced international joint venture agreement attorneys.

Types Of Joint Venture

Regardless of whether they are domestic or international, from a legal perspective, joint ventures are either contractual or equitable in nature. A contractual joint venture is merely a general partnership whereby the terms of the relationship are exclusively defined by a joint venture agreement. As such, the joint venture agreement must be clear in language and comprehensive in scope so as to minimize risk and prevent disputes among the venture partners.

Equitable joint ventures involve forming a legal entity, such as a US corporation or LLC, or perhaps a foreign entity in the venture partner’s country. The venture partners become co-owners of the new entity and conduct all venture activities through the new entity. For these types of international joint ventures, the entity’s formation documents, shareholder agreements, management team and other governing documents must be carefully negotiated.

Choosing one of the types of joint ventures over the other should be made after careful review of all circumstances and goals for the partnership. Because both types of joint ventures involve their own distinct advantages and risks, companies should work closely with experienced legal counsel to identify and manage all potential risks and liabilities.

Our firm’s international joint venture attorneys have expertise in forming international joint ventures and negotiating international joint venture agreements.

Risk Of Joint Venture

Equity joint ventures pose both opportunities and challenges for the companies involved. First and foremost is the challenge of finding the right partner—not just in terms of business focus but also in terms of compatible cultural perspectives and management practices.

Second, the local partner may gain the know-how to produce its own competitive product or service to rival the multinational firm. This is what’s currently happening in China. To manufacture cars in China, non-Chinese companies must set up joint ventures with Chinese automakers and share technology with them. Once the contract ends, however, the local company may take the knowledge it gained from the joint venture to compete with its former partner. For example, Shanghai Automotive Industry (Group) Corporation, which worked with General Motors (GM) to build Chevrolets, has pursued plans to increase sales of its own vehicles tenfold to 300,000 in five years and to compete directly with its former partner.

Select Trade Compliance Representative Matters

  • Advised US wireless Internet company in Mexican joint venture.
  • Advised US defense contractor and managed foreign legal counsel in formation of Turkish joint venture subsidiary.
  • Facilitated the establishment of Chilean/U.S. joint venture to import and sell flowers in the U.S.
  • Directed foreign counsel on formation and start-up of Italian joint venture subsidiary of U.S. semiconductor company.
  • Negotiated and drafted joint development agreements for software company.
  • Drafted joint development and manufacturing agreement for solar energy company.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at adv.aishwaryasandeep@gmail.com

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.