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Investing

Joint ventures offers some attractive benefits when building global footprint, experts say

Chinese companies looking abroad might want to try alternative ‘sharing’ path in push for global reach

PUBLISHED : Monday, 02 November, 2015, 6:36pm
UPDATED : Monday, 02 November, 2015, 6:48pm

Choosing a joint venture over a complete acquisition will smooth alternative path for Chinese companies looking to invest overseas, according to business leaders at a local forum Monday.

Speaking at the South China Morning Post China Conference , COSCO Pacific executive director Kelvin Wong said Hong Kong’s financial hub status could be used to help companies springboard into new opportunities.

But rather than piling into an aggressive buyout, a more cooperative structure that leverages the joint interest of the two parties can have intangible benefits that can prove invaluable.

“Two months ago, we announced that we were acquiring a port in Turkey [that] used to be a family business,” he said. “The entry mode we used was a joint venture because they were a local business with a long history, we needed them for our communication with the government.”

Shenzhen Qianhai Authority Hong Kong principal liaison officer Witman Hung said he believe sHong Kong plays a valuable role as a meeting point between Chinese and overseas companies looking to undertake a joint venture.

“For ASEAN countries, Hong Kong is like a capital heaven,” he said. “This is a catchment where we can attract the money from other countries, global as well as Chinese companies.”

NewQuest Capital Partners founding partner Bonnie Lo said some of her company’s client had encountered difficulties branching out into other countries due to a lack of local knowledge.

“You need to know about local culture, you need to have both the tools and ability to evaluate mistakes,” she said.

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