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International joint ventures are people intensive. It is the people relationships that are the glue that holds them together. Good people relationships between partners are the rudders which steer joint ventures through troubled waters.
Ideally, these relationships require continuity of the people involved in the development of joint ventures, certainly for a significant period of time during their creation and when they are getting the ground, but ideally for some time thereafter. Joint ventures are basically partnerships and when the representatives of the partners change too frequently, matters often get off course, sometimes resulting in the forced dissolution of the joint venture. There is much “water over the dam” now in terms of joint ventures and one lesson that can be drawn from the experience is that “people” changes should be made with great care in the naming of company representatives responsible for working with foreign partners on international joint ventures. The fact of change in itself in these representatives frequently is just not a plus in the development of the joint venture relationship.
Joint ventures, in a number of cases don’t work out because the “people” relationships become unglued and / or the business can’t be made profitable. With this in mind, international joint ventures should be structured to anticipate the worst contingencies. If this is done even though the contingencies don’t occur, you can feel that your company’s interests have been protected. Here, I would add an additional observation, namely, that a joint venture that did not work out may be profitable for the partners when broken up if the right decisions were made on the purchase of real estate or the acquisition of the right equipment. These assets may well be worth more when sold than when they were purchased by the joint venture when formed. This has been particularly true in Japan. If the breakup is profitable, then you’ll want to make sure that you get your share of these profits.