Wyoff and China-Luquan Negotiating a Joint Venture(a)

WYOFF AND CHINA-LUQUAN: NEGOTIATING A JOINT VENTURE(A) Introduction Situation Analysis Joint ventures (JV) are a popular method of foreign market entry because they theoretically provide a way to join complementary skills and know-how, as well as a way for the foreign firm to gain an insider’s perspective on the foreign market. Since China began its market opening in 1978, joint ventures have been the most commonly used form of foreign direct investment (FDI), with about 70% of FDI in China in the 1980s and 1990s taking the form of joint ventures (Qui, 2005, p. 47). The Chinese company, as well as the foreign investor, has since 1978 been drawn to the joint venture form. Walsh, Wang Xin (1999) note that from the Chinese†¦show more content†¦If Wyoff wants to avoid a repetition of the failed negotiations on the Caxtalene JV, Kwang and the other members of Wyoff’s negotiating team must find a way to reach mutually acceptable solutions on the product slate, product marketing, management structure, and staffing issues. Problem Analysis Lessons from the 2001-2002 Caxtalene Negotiations The 2001-2002 failed Caxtalene joint venture negotiations between CLQ and Wyoff provide important lessons on how to avoid failure in the current negotiations over the proposed AD/CE JV at CLQ’s Rizhao complex. In the Caxtalene negotiations there were critical substantive differences which prevented the parties from even reaching a preliminary agreement on ownership structure. Wyoff and CLQ were at polar opposites on both the equity split and the terms of technology transfer, with Wyoff demanding 80% and CLQ not prepared to go over 50%, Wyoff anxious to limit any substantive technology transfer and wanted to charge a substantial licensing fee for any technology that was transferred and CLQ expecting a free transfer of technology as part of the JV agreement. There were legitimate and rational reasons each side took the position it did on these initial issues. Based on their study of other Sino-American deals, Wyoff felt that a majorShow MoreRelatedWyoff and China - Luquan: Negotiating a Joint Venture624 Words   |  3 Pages1- What are the major challenges of working in a country with a different culture (give examples from the case)? There are four main challenges for Sealed Air when they expanded their business into Taiwan. i. The first challenge is culture differences. At the beginning of the case. When Paul Huang was in the training course he was too quiet. He didn’t even want to participate the group presentation. Furthermore, he didn’t like the meal provided, he would rather than eating just candy barsRead MoreWyoff Task 8959 Words   |  4 PagesTask 8- Wyoff and China -LuQuan: Negotiating a Joint Venture (A) Apply the Analysis process described in â€Å"Negotiation Analysis: An Introduction†, by Michel Wheeler to this case. Namely under separate headings (or in tabular form), address: 1. What were the parties BATNAs? Caxtalene Wyoff: * 60% and full management control and full license cost for technology. * Right to adjust price. * Profits paid immediately. CLQ: * 50% – 50% with lower license cost for technology.