Joint Venture Assignment Example | Topics and Well Written Essays - 3000 words

Joint Venture - Assignment Example In doing so, it provides an insight into trade between UK and China, with a focus on joint ventures. The importance of trade between UK and China cannot be underestimated as Dr Kegang Wu, (director of Chinalink, an arm of Liverpool Chamber of Commerce which offers expert help to companies across UK looking to trade with China and Chinese companies seeking an entry into UK), points out : There are still only around 300 UK companies doing business with China. In Cologne in Germany there are already more than 1,000. The numbers in France and Spain are also in the thousands. ....Relationships between Europe and China are being forged across many sectors. ....It is also estimated that in a few years China will control a 25% share of the worldwide textiles market. At the moment the focus is very much on British firms doing business over there but that will change rapidly as more and more Chinese companies look to expand into Europe. (MC Donough, 2005) Joint ventures have been used as entry vehicles as well as modes of sustaining operations in China. To understand the benefits and losses of a joint venture between Tots bots and V-Baby, one needs a basic understanding of the definition of a joint venture, at least a brief acquaintance with the background of each company, and an idea of what other modes are available for a foreign investor like Tots bots to gain a foothold in the Chinese market. 1.1 Company backgrounds Established in 1991, V-Baby is a hundred per cent export-oriented enterprise located in Ningbo, very close to Shanghai. It is a brand owned by V-Baby LLC, an American company located in New York, and is a limited company. It deals in babywear from 0-24 months. All its styles are designed by designers in New York, while the sales and production are carried on by the Ningbo V-Baby. It employs between 100 to 500 people for its sales and production and 40 to 50 people for its research and development, and operates from well established production premises. It has an online presence, and its products can be purchased over the internet. It emphasises on quality, protection of children, and is environment-friendly. It seeks to make sales worldwide by adding to its current client base, increase its present revenue, and build a stable brand reputation. On the other hand, Tots bots was born in 2000 in Glasgow, and is the brainchild of a Scottish mother who decided to provide an effective, easy, environment-friendly and cost-saving alternative to disposable nappies. With a staff of merely 20 people and counting, this company has recorded phenomenal growth in sales, and a great brand reputation in UK and other European countries. Its products are also available for sale online, and it caters to the 0-24 months segment of babies, just like V-Baby and it similarly prioritises baby welfare by using chemical-free soft terry fabric for its nappies, perfect for better baby health. It is a nascent company with great growth potential that currently seeks to lower the cost of raw materials and manufacture without compromising on quality and possibly enter different markets as well as further segments of baby products. 1.3. What exactly is a joint venture and why this is the best option for both companies Joint ventures can be defined as legally and economically