Why Joint Ventures Must Not Be Abolished


While I'm saying get rid of the 60/40 Only Policy of the Philippines but as said, JOINT VENTURES must still be made AVAILABLE.  So I'd say the start of a more open economy is the use of the 50/50 joint venture policy (for fairness, my preferred package if I were a foreign investor) which can go to 40/60 and 80/20 which more or less, the foreign investor is still in power but under the regulation of the government.

Having studied the basics of International Marketing with a highly competent teacher, I remembered there are really advantages of joint venture for foreign investors.  International joint ventures is where a foreign investor and a local company form a separate legal entity.  This kind of agreement sets the foreign market to KNOW the country better before it may consider getting 100% ownership in a sea of uncertainty.

Just to get the basics of joint venturing, here are they:
  1. It is a strategic alliance of two or more companies.  
  2. This is where they form a partnership to share markets, intellectual property, assets, knowledge and profits.  
  3. There is no transfer of ownership whatsoever.
  4. It can happen between large companies to large companies or large companies to small companies. 
  5. A foreign firm may want a joint venture to get resources which it has no idea to where it can get on foreign soil.

In fact, kicking out joint ventures can result to these disadvantages:
  1. Foreign firms will swim in uncertain waters unguided.
  2. Foreign firms will have no way to be familiar with the country before they get 100%.
  3. Foreign firms may in the long run, also encounter difficulty in getting resources in a foreign land.
  4. Foreign firms can end up swallowed by competition should they compete in other developed countries.
  5. There is no 100% guarantee of success that a firm will succeed in foreign waters so why give them 100% ownership if they are just starting?  A 50% and up ownership would be better.

For more information, you can read here.

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