| Publication |
2009.
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| Summary/Abstract |
Joint ventures in China between Japanese and Taiwanese firms have been increasing since the end of the 1980s. However, the literature suggests that the performance of joint ventures with third-country-based firms is the lowest among all types of joint ventures. The reasons attributed are that this type of joint venture lacks local access through a local partner and entails higher organizational costs, stemming from the large cultural distance between investing parties at both the national and corporate levels. Proving otherwise, this article preliminarily shows that the termination rate of Japanese-Taiwanese joint ventures in China is not necessarily high compared with that of overall Japanese investments in China. Joint ventures with Taiwanese companies improve local access for Japanese partners by making it easier to: (1) access Taiwanese affiliates with a large economic presence in China; (2) facilitate smooth entry into the local market by utilizing distribution networks that Taiwanese parties possess there; and (3) gain local information from Taiwanese partners whose language and culture are similar to China's. The article also suggests that organizational costs are reduced because of the mutual trust built as a result of the long history of collaboration between Japanese and Taiwanese partners.
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