ABSTRACT
This chapter examines the historical and institutional factors behind the explosion of Sino-foreign joint ventures (JVs) at the start of the reform and opening up process. It looks at the benefits and costs of such ventures against the background of conflicting motives, differences in the resource bases of the partners, and the nature of JVs as learning races. As reform relaxed the legislation mandating joint ventures, many of them evolved into wholly owned foreign enterprises (WOFEs). In addition to government's priorities, market entry barriers (MEBs) are essential to understanding Sino-foreign JVs. In 1996 the equity joint ventures (EJV) between France's food giant Danone and the Chinese beverage company Hangzhou Wahaha Group was described as a "showcase" Sino-foreign JV. In many cases the conversion of a foreign equity joint venture (FEJV) into a WOFE can be seen as a natural process arising from experiential learning and the dynamics of market positioning.
