We are a Chinese construction group that is considering a possible JV arrangement with a U.S. developer on ground-up construction on a manufacturing facility. We have never worked with a U.S. or Western company before. We want to be a successful partner for our U.S. counterpart. What should we know about working with the U.S. developer that might be different than doing business with another Chinese company?
The United States has a very diversified culture when it comes to any form of investment. Therefore, we would suggest for you as a foreign investor to first build the right chemistry with your new partner and make sure all responsibilities for each side is properly planned out and agreed on paper. Like in any partnership, you will inevitably have ups and downs; therefore, you need to be ready and aware of the pros and cons of working with a new partner.
I do see many differences between the ways U.S. and Chinese companies conduct businesses, including when to initiate the business talk, relationship first or business first, the legal process, the thinking process, and even the way they shake hands. It is hard to sum up all. I think engaging someone with both a Chinese and American background would definitely help smooth the process.
U.S. companies are very contract oriented. They expect business to be done according to both the written word and the intent of the parties contained in the contract. Therefore, it would benefit the Chinese partner if they spend the time and expense up front to negotiate out, in detail, the various limitations and arrangements of this joint venture arrangement. The more detailed the agreement, the better. Avoid the more common Chinese practice of having a vague understanding initially and negotiating the boundaries of the joint venture arrangement as you go along. That will cause a great deal of problems within the U.S. partner's company and will not be well received.
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