The key activities of partnership development in China—a study of Sino-Finnish partnerships

Abstract China is becoming a powerhouse of the world economy nowadays. Its high economic growth and large domestic market attract many Western companies to invest there. Partnering with local companies is a common way for most Western companies to enter the Chinese market and learn about the new business environment for the first time while implementing their international expansion strategy. However, finding the right impetus for the partnership strategy to achieve the business goals is not easy as, quite commonly and for various reasons, many partnerships are dissolved before they achieve the expected goals. The aim of this study is to identify the key activities of partnership development in the context of Sino-Finnish partnerships. Two types of partnerships appear in this study, i.e. joint ventures and manufacturer-distributor partnerships. A multiple case study methodology is adopted in the empirical study. A framework for partnership development is used to examine the partnership process in China. The key activities are identified in the formation and management stages. In the formation stage of the partnership, three key activities are identified for partnership development: learning and assessing the motives of the partners, partner selection, and choice of type of partnership. In the management stage, four key activities are identified: human resource management, knowledge transfer, risk management, and cultural differences. The framework for partnership analysis is adapted in line with the case study results. The results of the case study are as follows. The motives of partnerships stem from the partners' own needs and their strategies of development. In addition to the motives suiting both partners, the strategies of the Finnish or incoming partners should also suit the contemporary business environment in China. Task and partner-related dimensions feature in the criteria of partner selection. Human resource management is perceived as a fundamental activity in partnership management and happens either by localization or hybridization in the case partnerships. The central issues of human resource management are the recruitment and retention of both management level, and technical, personnel. Complementary knowledge transfer between partners contributes to supporting the operations and joint activities of the partnerships. The risks to partnerships are sourced as twofold by the case partners – from inside the partnerships and the business environment – and are dealt with as they arise. Cultural differences in the partnerships require inter-organizational and interpersonal adaptation. Trust and open communication are two facilitators in the management process of partnerships