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How to get rid of the "right to speak" dilemma for joint venture auto companies?
In the world of automotive journalism, few topics generate as much interest as "who speaks for whom." No matter the theme of a joint venture's press conference, reporters are always eager to ask about who holds the authority to represent the company. When there are internal changes or leadership shifts within the company, this question becomes even more prominent. It's almost expected that journalists will raise this issue—otherwise, their coverage might seem incomplete.
The topic of "speaking rights" has long transcended the internal affairs of joint ventures and has become entangled with national sentiment, the survival of domestic industries, and even national security. Especially in full-vehicle joint ventures where ownership is balanced, any issue tends to be framed in a political context. This creates immense public pressure on the companies involved. On one hand, they feel the need to avoid appearing as if they're compromising on key decisions or "selling out" to foreign interests. On the other hand, both parties may unconsciously fall into a competitive dynamic where each tries to assert control over the narrative.
Chinese managers often act as representatives of Chinese shareholders, while foreign counterparts speak in the tone of their own corporate interests. The situation can be confusing and sometimes alarming. Everyone wants to be in charge, but achieving a true win-win outcome through compromise is not easy. Differences in ownership, culture, business philosophy, and even operational styles can lead to three possible outcomes: one side yielding in form but continuing to challenge behind the scenes, a deadlock that leads to retaliation, or a mutual commitment to prioritize the company’s interests and find common ground.
Each scenario has its pros and cons. However, it's clear that encouraging conflict over "speaking rights" can be one of the most effective ways to undermine a joint venture. Despite the risks, few companies can escape media scrutiny on this issue. Some even use journalists' curiosity to leak information, hoping to create pressure on the other side.
Shanghai GM is an exception, with relatively fewer controversies around speaking rights. This may be due to its strong localization strategy and self-serving business model. Guangzhou Honda, on the other hand, has long been seen as having high alignment between Chinese and foreign partners, though its weaker position may have helped reduce tensions. Still, even these successful ventures aren't immune to the issue. Over time, as circumstances change, the "speaking right" dilemma may resurface.
Addressing this issue poses a fundamental challenge for joint ventures, especially those with strong Chinese partners. Beyond cultural and ideological differences, many Chinese joint ventures are state-owned enterprises with goals beyond profit, such as job security and brand development. These factors often lead to short-term decision-making, which complicates long-term collaboration.
In early 2023, Dongfeng Nissan launched a "Comprehensive Action Plan" aimed at breaking the "speaking right" dilemma by focusing on mutual interests. After a year of implementation, the company's performance improved significantly, and the plan was hailed as a "basic law" by experts and media alike.
Looking closely at Dongfeng Nissan's approach reveals how they managed to overcome the issue. In 2003, when the joint venture was established, both parties made it clear that all managers represented the joint venture, not their respective shareholders. This stance was unprecedented in the industry and showed a shared understanding of the importance of the issue. However, it didn’t receive much attention at the time, as media focused instead on the idea of "full-scale joint ventures."
Despite this initial consensus, the lack of institutional constraints led to ongoing conflicts. Sales dropped, and production stalled. Eventually, both sides had to face reality and formalize their agreement into a "Basic Law." Unlike verbal agreements or memorandums, this document introduced hard constraints to prevent future disputes.
While the process of creating the "Basic Law" was emphasized, its real value lies in its ability to establish clear rules and procedures. Even if some aspects remain imperfect, it provides a solid foundation for cooperation. For joint ventures, reaching a consensus is essential, but turning that into actionable strategies requires structured processes. Relying on personal relationships or values alone is not enough.
Ultimately, the success of a joint venture depends on strong cooperation, and the "Basic Law" offers a practical solution worth considering. One of the best ways to revitalize a joint venture is to work together to resolve the "speaking right" dilemma.