Podcast
Questions and Answers
Why might a US company seek a partnership with a local company when expanding into a country like Vietnam?
Why might a US company seek a partnership with a local company when expanding into a country like Vietnam?
To gain local market knowledge and expertise, and to reduce the risks associated with unfamiliar business practices and culture.
In the Aggreko® joint venture example, what specific benefits did Shanghai Yude bring to the partnership?
In the Aggreko® joint venture example, what specific benefits did Shanghai Yude bring to the partnership?
Shanghai Yude brought their experience and respect within the local Chinese Market.
Explain how forming a joint venture can assist foreign companies in overcoming challenges related to cultural differences.
Explain how forming a joint venture can assist foreign companies in overcoming challenges related to cultural differences.
Local partners help navigate and understand local customs and business practices, which reduces the chance of misunderstandings and improves relationship building.
If a European company wants to establish a manufacturing plant in Thailand, outline two key pieces of information that a local partner could provide to de-risk this venture.
If a European company wants to establish a manufacturing plant in Thailand, outline two key pieces of information that a local partner could provide to de-risk this venture.
Why would adhering to Aggreko's standards and procedures be important for Shanghai Yude Aggreko Energy Equipment Rental Co. Ltd?
Why would adhering to Aggreko's standards and procedures be important for Shanghai Yude Aggreko Energy Equipment Rental Co. Ltd?
Flashcards
Risk of foreign market entry
Risk of foreign market entry
Entering a foreign market can be risky due to unfamiliarity with local customs and practices.
Business Partnership
Business Partnership
A collaborative agreement between two or more companies to undertake a specific project.
Value of Local Knowledge
Value of Local Knowledge
Collaborating with a local company to gain insights into the market, practices, and culture.
Joint Venture
Joint Venture
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Aggreko & Shanghai Yude
Aggreko & Shanghai Yude
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Study Notes
- Business partnerships across borders can be established when a company lacks the knowledge to enter a new foreign market.
- Setting up operations in a foreign market is very risky.
- One approach to reduce risk is to form a partnership with a company already operating within the new country, leveraging their existing market knowledge.
- Many US and European companies have used this approach when setting up operations in Asian markets like China, Vietnam, and Thailand.
- Markets in those countries often have different business practices and cultures to those of western countries.
- Joint ventures, partnerships, and alliances are common in foreign business ventures.
- In 2018, Aggreko®, a UK-based global leader in mobile, modular power and heating and cooling, formed a joint venture in China with power rental company Shanghai Yude.
- The new company is called Shanghai Yude Aggreko Energy Equipment Rental Co. Ltd.
- Shanghai Yude manages the new company, in agreement with Aggreko's standards and procedures.
- The move is part of Aggreko's long-term strategy to grow its business in China with experienced and respected local partners.
- This example demonstrates the value businesses place on local businesses when entering a new market.
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Description
Entering a new foreign market can be risky. Forming a partnership with a local company can reduce risk by leveraging their existing market knowledge. Joint ventures and alliances are common in foreign business ventures.
