Business China

The Key Factors for the Success of Chinese-foreign Joint Ventures

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If a business model is to be successful, there must be some commonality. What are the key factors for a successful joint venture business model? Integrity is the cornerstone of the whole society and the foundation for the success of the joint venture. There are several key factors for success.

1. Establish an effective distribution mechanism
The effective profit distribution mechanism is the first key factor to the success of the joint venture, and it plays an irreplaceable role in the construction of the business model of the joint venture. It can stimulate the initiative, enthusiasm and creativity of all the people in the joint venture.

The so-called effective profit distribution mechanism is to be able to distribute benefits fairly, reasonably and scientifically. To measure the effectiveness of the benefit allocation mechanism of the joint venture, the following factors should be investigated.

The first is whether this mechanism is conducive to stimulating the enthusiasm, initiative and creativity of all members of the joint venture?

The second is whether this kind of interest distribution mechanism can reflect the social values of "people-oriented", whether it can be relatively fair and just?

The third is whether this kind of interest distribution mechanism advocates and encourages legitimate competition?

2. Establish a strict structure of corporate governance
How to improve the corporate governance structure? In accordance with the requirements of the modern enterprise system, we should standardize the responsibilities of the shareholders' meeting, board of directors, board of supervisors and management managers, and improve the employment system of corporate leaders. The board of shareholders decides the board of directors and board members of the board of supervisors, the board of directors chooses to operate the management, and the management shall use human rights.

According to the requirement of modern enterprise system, perfecting the corporate governance structure of joint venture should solve several practical problems.

One is to ensure that ownership is in place. This is an important condition for forming effective corporate governance. It is difficult to avoid the abnormal behavior of the other participants of the joint venture without the incentive and restraint of the owner, and the owner's own rights and interests cannot be guaranteed.

The second is to standardize the rights and responsibilities of the shareholders' meeting, board of directors, board of supervisors and management of the joint venture. Shareholders do not give the operation of the joint venture directly to the general manager, but instead entrust the company to the board of directors with decision-making and supervisory ability. The board of directors is entrusted by investors, whose main responsibility is to ensure the long-term interests of the company. Its most important function is to appoint and replace the company's top management, make strategic decisions, supervise management's work, evaluate managers' performance, and determine their pay and retention. The board must also ensure that the business is in compliance with the laws and regulations, including the authenticity and legality of the financial statements. The board of directors is at the core of corporate governance. So, we should optimize the structure of the board of directors, including the establishment of external directors and independent directors; In addition, an audit committee, nomination committee and remuneration committee shall be composed of external and independent directors; The independence of the board of directors should be emphasized to strengthen the personal responsibility of the directors. The third is that the company must focus on return on investment. Only in this way can we establish financial budget constraints to accurately evaluate the company's operating performance.

The fourth is to establish the selection and employment mechanism of the error-correcting function. The responsibilities, decentralization and balance of the joint venture are mainly achieved through the control of the people. We will timely find out the problems in the selection of persons and correct them in time. To this end, we should actively explore the new mechanism of selecting candidates to adapt to the legal requirements of the company system, and organize the assessment and introduction of market mechanism and open social recruitment.

The fifth is to improve the company's transparency and strengthen the timely release and delivery of information.

3. Establish an effective selection, assessment and supervision mechanism for professional managers
The ideal hiring pattern for a joint venture is to hire a professional manager. However, it is necessary to establish the mechanism of professional managers including selection mechanism, incentive mechanism, supervision mechanism and evaluation mechanism. The selection mechanism, which is in the joint venture, must be selected by the board of directors through the manager's market and guided by the principles of openness, fairness. The incentive mechanism is to make the managers who are good at business and benefit significantly higher than the general staff, so that they have the intrinsic motivation of conscientiously due diligence. It will also create a good working environment and conditions for them, from the social honor and material life to inspire them to run the enterprise's mission sense and achievement desire. The supervision mechanism refers to the supervision mechanism which is effective to them while giving them authority. Generally speaking, the supervision mechanism of professional managers mainly comes from four aspects: first, the supervision of national regulations, economic policies and financial accounting system; The second is the owner or investor through the shareholders' meeting, the board of directors, the supervisory board and the asset's earnings and the supervision of the stock fluctuation; Third, consumers will supervise through market mechanism and commodity price. The four is the supervision of the workers and staff members of the enterprise through the representatives of the shareholders' meeting, the board of directors and the board of supervisors, and the various democratic management committees; The evaluation mechanism should evaluate the performance of professional managers objectively and justly, which can provide scientific basis and standard for the formation of selection, encouragement and supervision mechanism.

4. Unified brand and communication action.
If a joint venture wants to be successful, it is necessary to make the channelization of the brand and the branding of the channel. The channelization of brand is to implement the brand of the manufacturer in every detail of every person that runs through every link of the channel, and it uses brand specifications to unify all channels; The branding of the channel is to plan and manage the channel of the joint venture by brand. All the joint venture enterprises in the country must develop unified brand integrated communication outline, unified brand core value, brand slogan, advertising language, VI visual identification system, etc.

5. Uniform values and norms of behavior
The joint venture is a strategic alliance between the manufacturer and the dealer, the relationship of the interests of the past is the partnership of strategic cooperation, and the transaction marketing of the past is the current partner marketing.

First, ensure that values reflect the long-term goals of the joint venture.

Since values is the core of the joint venture enterprise culture, it plays an important role for the long-term development of the enterprise, and the determination of the values of the joint venture should reflect the company's long-term goals, it has intrinsic consistency, so as to guide and motivate every one of us.

The second is to ensure that the values correctly express the industry characteristics of the joint venture.

The characteristics of the joint venture, the characteristics of the products, the attributes of the brand and the characteristics of the employees are important factors that influence the characteristics of the values. The above factors should be organically integrated into the values of the joint venture.

Third, we will persistently instill the values of the joint venture.

In various ways, all members of the joint venture are inculcated with the values of the joint venture to "sneak into the night with the wind and moisten the material".

Fourth, ensure that all elements of the value of the joint venture can be translated into action without error.

The value of a joint venture, if it can't become the actual action of every member of the joint venture, is just a hollow slogan. If no one executes, no one is convinced.

Fifth, we must keep constant inspection and supervision.

Management must lead by example, and only if they take the lead to convince the average employee and lead them to behave according to their core values, for long, it can transform the company's core values into individual values and be further "customized". If we constantly check and supervise, the value of the joint venture will be able to play its best role in management.

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