Collapse of joint China-US venture highlights need for advisory partners

The apparent collapse of the joint-venture China-US construction of the world’s largest solar power plant has underscored the perils that can be faced by foreign companies trying to break into the lucrative Chinese market.

It also highlights the need for foreign companies to enlist business advisory firms with proven track records in assisting foreign companies to establish in China.

Arizona-based First Solar signed a “memorandum of understanding” to build the plant in the Inner Mongolian desert, with commencement scheduled for June 1.

However, the Inner Mongolian government now say they intend to open the project to competitive bidding, apparently in response to complaints by the many Chinese competitors in the solar energy field.

Business advisors operating in China have stated that such “memorandums of understanding” are often signed when foreign notaries are visiting, but then never come to fruition.

Chinese competitors questioned why such a large project was granted to a foreign company, without any chance for local companies to bid.

These are just some of the issues foreign companies need to consider when entering into business in China.