International Joint Ventures Essay Example | Topics and Well Written Essays - 3250 words

International word Ventures - Essay ExampleReasons for shifting to wholly possess subsidiaries alternatively than joint ventures Wholly owned subsidiaries and joint ventures Subsidiaries are those companies which are controlled by larger organizations like an MNC. It guarantees broad operational ownership in the server country. A wholly owned subsidiary is one where the recruit high society owns 100% stocks of the subsidiary company. These are the expensive and complicated form of market presentation. To establish a wholly owned subsidiary, a company can either enter into ventures with a local company or can establish a new venture on its own in the host country (Charles & Jones, 2007, p.290). A joint venture is a strategic move adopted by countries epoch setting up a trading outside their home countries. In joint ventures a multitude of companies come together to conduct a specific business objective (Gutterman, 2002, p.1). Basically wholly owned subsidiaries and joint v entures differ on the aspect of ownership. While joint venture companies may be owned by two or more companies wholly owned subsidiaries are owned by a single company which maintains complete control over it. In the light of the trade wind reforms and practices introduced by WTO, it becomes idle for a country to establish its subsidiary company in a foreign country where it would induct its complete control over the daily activities. Many companies avoid in establishing joint ventures due to the complexities snarly in the coordinating policies, decisions and execution with a different company. Let us take the example of the Chinese economy. The trade reforms have changed the Chinese economy drastically. China which previously had its monopoly over almost all of its concern activities by the state owned companies (Siyuan, 2007, p.22) has now adopted the WTO policies by becoming one of its member countries (International Joint Ventures in China after WTO Accession Will Trust Rela tions Change?, 2005, p.5). It has opened its markets in agriculture to the world. With the establishment of WTO trade rules, baking industry in China underwent a sea change. extraneous banks that were not allowed to operate freely in the Chinese market found the opportunity to establish internationalist wholly owned subsidiaries in the country that would be controlled by the foreign national companies. This was beneficial for the Chinese economy too as the foreign banks introduced new technology and which helped to increase the economic growth (Foreign banks excogitate in China after WTO entry, 2011). The relative advantages and disadvantages of the JVC versus the wholly-owned subsidiary as a means of market entry Trade reforms introduced by WTO- an idea After the establishment of WTO in 1995, many trade reforms were introduced crosswise countries. This has lengthy to the Asian countries too like China and India. WTO introduced several reforms in the trading system. WTO has lower ed trade barriers across nations through negotiation. This has resulted in reduced apostrophizes of production as the import cost gets lowered and the cost of the resources which became cheaper. This directly leads to the reduction in the cost of the consumer articles which reduces the cost of living for the people (World Trade Organization, 2008, p.6). Reducing trade barriers have also increased the income levels of the companies both at a personal level and also from its business perspective. This also contributes in increasing the world