Evaluation of Joint Ventures as a Mode of Entry into the Chinese Market

Seminar paper from the year 2015 in the subject Business economics - Business Management Corporate Governance grade: 23 University of Applied Sciences Essen language: English abstract: This term paper will first of all give an overview of existing foreign market entry modes. Secondly there will be a description of joint ventures in general by analyzing typical motives and risks for using a specific mode of entry to internationalize. At the end of the second part the situation on the Chinese market is discussed to introduce the reader to the concrete business case of Volkswagen and SAIC Motors which will be discussed in the third part. Finally this paper will provide an evaluation of the success of this joint venture on the Chinese market.Globalization in recent times has generated a lot of interest in the business world. More companies are now seeking to escape their comfort zones (home markets) and enter into international markets to expand their businesses. Internationalization has seen several factors as its driving force. More countries have opened their markets to foreign entrants through liberalization and deregulation of previous trade-inhibiting laws. Consumers in most parts of the world have also exhibited a homogenous behavior that encourages internationalization. Products that sell well in one part of the world have shown the likelihood to perform the same in other areas which has motivated more companies to explore international markets.Other external driving factors are an improvement in technology and logistics. It is now possible for companies to communicate and track the activities of each of its subsidiaries or branches in the world. Technology has offered a business with an appropriate infrastructure that ensures smooth running of their affairs worldwide. Some products also exhibit shorter life cycles; thus limiting the amount a company can produce. Internationalization offers such company's ability to produce more by expanding