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:
- It is a strategic alliance of two or more companies.
- This is where they form a partnership to share markets, intellectual property, assets, knowledge and profits.
- There is no transfer of ownership whatsoever.
- It can happen between large companies to large companies or large companies to small companies.
- 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:
- Foreign firms will swim in uncertain waters unguided.
- Foreign firms will have no way to be familiar with the country before they get 100%.
- Foreign firms may in the long run, also encounter difficulty in getting resources in a foreign land.
- Foreign firms can end up swallowed by competition should they compete in other developed countries.
- 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.