Joint Ventures between a foreign multinational and local entity are common across Asia, but can be a minefield and often fail to live up to expectations. Over 8 years, more than 100 real-life examples have been studied across multiple industries and markets to identify what are the common key to success and reasons for failure

1. Joint Ventures in Asia Key insights on establishing and managing successful JV’s in Asia, and avoiding common pitfalls

2. A Basis in Practice, Not Theory 8 years and more than 100 real life examples used Phase 1 – Focus on Asian markets Financial Services JV’s During 2004 – 2006, in depth field work was carried out to analyze the experience, success and failures of financial services JVs in Asian markets – and to derive a “Key Success Factors” blueprint for future JV’s that may be established Field work involved 1-1 interviews with the CEOs and a range of senior executives of 10 JVs across the retail financial services sector, in each case the foreign party being a recognized multinational. The interviews and discussions were conducted in Beijing, Shanghai, Dalian, Tianjin, Guangzhou as well as Hong Kong. Added to this, a range of other interviews with senior industry figures were also conducted. These included representatives of major corporate strategy and consulting actuarial business active in the Asian markets financial services market, and this was supported with extensive desk work was also carried out with annual reports, strategy presentations, analyst reports, press releases and industry publications searched and summarized for relevant content. Phase 2 – Input From Due Diligence Projects – Multiple Industries and Markets As the decade unfolded, the number of JV’s in numerous Asian markets and across many sectors of the economy began to emerge within the M&A space as many of these had reached a level of maturity. JV’s covered the spectrum of being both the potential acquirer or consolidator as well as the target. Some were distressed or non performing, and some were experiencing excellent growth and returns. In some cases, global M&A activity was a catalyst, for example in forcing two newly merged former competitors to have to exit one JV in a market where regulation or business logic demanded this. It became increasingly clear that the same range of issues and factors were at play in the success or failure of JV’s in other markets across Asia, and were relatively universal regardless of the industry category, effectively with minor, cosmetic differences. Insights and experienced obtained from a range of Due Diligence projects conducted at first hand by the author, plus the active engagement of senior figures within the Investment Banking industry across the region were collated and provided additional depth, perspective and applicability of the study. Phase 3 – Further Focused Research in Depth The period 2008 – 2011 provided the author with the opportunity to study in depth the practicalities associated with JV’s in Asian markets, Japan and Malaysia and franchise/partner businesses in India, Australia, South Korea, Indonesia, The Philippines and Vietnam from a “hands-on” perspective on the inside of a large multinational. In addition, the author was able to investigate in depth a financial services JV in Thailand, while being responsible for the establishment of a new financial services JV in India and consumer goods JV in Thailand using many of the insights gained from this research project

3. The Executive Summary Building the foundations for success I Getting a successful JV established II Operating a successful JV III IV Exiting V Gold medals and wooden spoons VI About the author

4. I. Establishing the foundations for a successful JV

8. II. Establishing a successful JV in practice

10. III. Operating a successful JV

14. IV. Exiting a JV

15. V. Gold Medals and Wooden Spoons Conducting first hand research into this topic, and speaking first hand to senior executives within both the foreign partners as well as JV’s themselves across the Asian region has been a fascinating and illuminating experience. In most cases the foreign partner was a significant multinational, and in the majority of cases was a global “Fortune 100” company with well recognized and respected brands. One factor was almost universal; the executives – whether they had been fully or partially responsible for the JV’s establishment or had become involved later in an operational capacity – all stated that they or their companies made some fundamental mistakes in the way they went about the exercise, and would do things differently if they were given the same task again. These comments were quite consistent, and startling considering the range of different organizations, their global reach and experience, and the level of resource most had to call upon. And considering the amount of financial investment involved, the comments were concerning. How could it be that so many companies, with so much management talent and experience, willing to invest so much capital, would admit they would do things differently in the future? The answers are complex as are the reasons for these comments in some cases, and it is rare for anyone with the gift of hindsight to not identify things they would wish to change or do differently. And in some cases the JV’s have performed well but still there were some major issues or false starts to get to the current point. However even discounting those factors there remains an unexpectedly large number of companies who admit to serious shortcomings in the way they have established or operated their JV operations in China, and these are arguably companies that would in the normal course of things be expected to do things well – whatever they do. Analysis of the underlying cause of the self-confessed shortcomings of this group highlights some common themes and these emerge as the most critical pitfalls to avoid, or conversely the most critical success factors that must be met.

16. Key common pitfalls The most common underlying cause of failure or sub-optimal performance of the JV mentioned by the foreign partner

17. VI. About the Author David Christensen resides in Melbourne, Australia, he has his primary office in Hong Kong, and has business interests in a number of other countries in Asia. He has an extensive career as a Management Consultant and Senior Executive within multinational corporations spanning the Asia Pacific regionin the financial services and travel categories Specializing in corporate strategy, capital raising and market entry projects, he has undertaken assignments that have included working in Asian markets, Hong Kong, Taiwan, Japan, South Korea, India, Singapore, Thailand, and the Russian Federation as well as Australasia. He is a Partner of Gravitas Partnership and works closely with McNeill & Partners, a boutique investment advisory business based in Hong Kong. His corporate experience has included regional senior executive roles within American Express, Mercer, and AXA Asia Pacific. He can be contacted by email at david.d.christensen@nextfsasia.com and an unlocked version of this presentation will be emailed upon request. www.nextfsasia.com