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Understanding Contractual Joint Ventures in China


  • Yue Wang


Contractual Joint Ventures (CJVs) in China have been under-studied despite their importance as one of the three major forms of foreign direct investment (FDI) prescribed by the Chinese government. Based on first-hand survey data and within a transaction cost-comparative institution framework, the paper conceptualizes the nature of CJVs as a relational subcontracting arrangement rather than a form of FDI. Formed mainly between Hong Kong and Chinese manufacturing firms in the South China province of Guangdong, CJVs display quasi-market and quasi-hierarchy features, sitting between Processing and Assembling arrangements (P&As) on the one hand and Equity Joint Ventures (EIVs) and Wholly Foreign Owned Enterprises (WFOEs) on the other. The theoretical and practical implications are discussed.

Suggested Citation

  • Yue Wang, 2007. "Understanding Contractual Joint Ventures in China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 5(1), pages 75-90.
  • Handle: RePEc:taf:jocebs:v:5:y:2007:i:1:p:75-90
    DOI: 10.1080/14765280601109394

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    Jel Classification; F23;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business


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