Analyzing China-UK Joint Ventures: Successes, Failures, and Culture

This report analyzes the dynamics of joint ventures between China and the UK, with a particular focus on Burberry's entry into the Chinese market. It highlights the significant cultural differences between the two countries, particularly in terms of power distance and authority, and how these differences impact business operations. The report identifies key success factors for joint ventures, such as clear agreements and flexibility, while also addressing potential failure factors like protecting intellectual property and ensuring company compatibility. Examples of successful joint ventures, like McDonald's, and failures, like the Danone-Wahaha partnership, are used to illustrate these points. Furthermore, the report emphasizes the importance of cultural sensitivity, including adhering to local practices and norms, and incorporating cultural elements into branding and marketing strategies for effective business ventures. This analysis provides valuable insights into navigating the complexities of international business and fostering successful partnerships between Chinese and UK entities.

A joint venture
between
China and UK

Slide 10 : introduce the
Chinese culture
• Burberry is UK based luxury brand which officially entered
the Chinese market in the year 2010.
• The Chinese and UK culture is drastically different in many
aspects which need to be understood in order to ensure that successful
business ventures and joint ventures are completed.
• The primary difference between Chinese and UK culture is
the way in which power differences and role of authority is tolerated.
• In United Kingdom the power difference index is low which
means that actions are taken to lower inequality and difference between
individuals at high level of authority and individuals working below
them.

Slide 10 : introduce the Chinese culture
On the other hand Chinese culture values power difference with high level of power difference
index.
The high level of tolerance towards power and authority is commonplace in China including
workplaces, family and personal relationships.
An example of this cultural difference between China and UK is the government structure of China
and UK.
China's governing party is the CCP with socialist ideology and democratic dictatorship. This type
of autocratic government structure is accepted in China.
On the other hand UK has successfully established a democracy which showcases higher level of
acceptance towards equality and egalitarian environment.

Success Factors for Joint Venture:
• Agreement: This primary factor which affects growth
and stability of joint venture is development of clear, fair and
detailed agreement so that the joint venture structure can be
easily adopted and implemented by the companies in question.
Burberry needs to ensure that an agreement compliance with
China and UK laws is created so that their joint venture remains
successfully.
Slide 11 Success and failure factors of joint
ventures

Slide 11 Success and failure factors of
joint ventures
Flexibility: Joint ventures need to be flexible so that business objectives
of the parties involved on the joint ventures are attained effectively and
conflicts can be avoided. Burberry needs to ensure that their Joint venture
is flexible through suitable business policies and structure so that it attains
long-term success.
An example of Successful Joint Venture in China is McDonald which has
formed successful joint venture with with CITIC Ltd., CITIC Capital, and
Carlyle Capital. The company has gained success in starting Joint Venture
in China because of forming suitable agreement and flexibility.

Slide 11 Success and failure factors of
joint ventures
Failure Factors for Joint Venture
Protecting Intellectual Property: The risk of misuse of intellectual
property is high when creating joint venture. In case of starting
Joint venture in China this can be failure factor for Burberry and
the company needs to protect its luxury fashion IP from
counterfeiting, theft or misuse.
Incompatibility: Mismatch between strategic objectives and
unrealistic expectations are the primary reason for failure of Joint
ventures. In case of China Burberry needs to partner with
businesses which are compatible with its strategic direction t get
better results.

Slide 11 Success and failure factors of
joint ventures
An example of business failing in starting
successful joint venture in China is the
Joint venture between French food
company Danone and Chinese company
Wahaha. The incompatibility between
companies resulted in legal cases being
filed by Danone against Wahaa in 2007
and end of the joint venture soon after.

Slide 12 Cultural Sensitivity in
china/the difference from UK
Cultural sensitivity is an important issue for an organization expanding to
China.
This requires adhering to the formal and informal practices, regulations and
cultural norms in order to create sensitive branding of the company instead of
presenting hostile look of the organization.
Cultural sensitivity can be achieved be incorporating cultural elements such as
celebrating Chinese festivals as marketing and promotion.
Burberry can support cultural sensitivity to Chinese business norms by
understanding workplace hierarchy common in China and promoting Chinese
cultural values in its brands.

References
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Liao, Y., Dillenburger, K. and Buchanan, I., 2018. Does culture matter in ABA-based autism interventions? Parent and
professional experiences in the UK and China. European Journal of Behavior Analysis, 19(1), pp.11-29.
Koch, B.J. and Koch, P.L., 2018. Joint venture survival in China: the importance of tangible and intangible trust. Journal
of Asia Business Studies.
COUNTRY COMPARISON, 2022. [Online] Available through <
https://www.hofstede-insights.com/country-comparison/china,the-uk/>
Joint Ventures in China: Learning from Starbucks and McDonald’s, 2017. [Online] Available through <
https://www.china-briefing.com/news/joint-ventures-in-china-learning-from-starbucks-and-mcdonalds/#:~:text=McDonal
d's%20formed%20new%20JV%20to,CITIC%20Capital%2C%20and%20Carlyle%20Capital
.>