This morning I wrapped up the first unit I’m teaching on China FDI. We ended with JVs, and since I had started everything with the history and economic policy background of foreign investment in China, I threw out the following question:

Do you think foreign investors in 2007 have the same reasons for using the JV structure than enterprises did in 1997?

I got a few interesting responses. Note that we were generally assuming that the major motivations for setting up a JV back in the old days were foreign investment restrictions and benefits from the local partner’s knowledge, business connections, and relationships with the government.

I asked the question because I think things have changed, and those original motivations are not always still operative. However, there are still new JVs being set up.

Why is that and what would motivate a foreign investor now to use that structure?