A company that wants to enter a new geographic market within China or Saudi Arabia should avoid joint ventures with companies that are based in that country. Partnering with a foreign entity props up that entity's business rather than weakening it through competition.

Question

Quizplus · Accepted Answer

When foreign firms enter new geographic markets, some governments, such as Saudi Arabia or China, require that these firms have a local joint venture partner before doing business in their countries. While the foreign firm can benefit from local expertise and contacts, it is exposed to the risk that some of its proprietary know-how may be appropriated by the foreign partner.

A Company That Wants to Enter a New Geographic Market