By Adrian Mutton, HSP’s in-country India expert
Companies considering international expansion to India may want to look at what is often seen as straightforward, low risk way of entering the market: a joint venture. These are partnerships whereby the parties agree to collaboratively setup a new entity, sharing expenses, assets and revenues. When expanding into new geographies, it is common for foreign companies to seek out local partners with which to join forces, particularly when looking to expand into a country with complex laws and regulations, like India.
Joint ventures mean a fast start
When you work with a partner in India, there is no lag time for setup, etc. You can hit the ground running with a local partner who can help sales and distribution begin almost immediately. With unique local knowledge that would take a huge time investment for a foreign company to develop independently, local partners already have infrastructure in place, making a joint venture an attractive option.
There can be IP risk
However, when working with a joint venture partner, there is a significant risk for a lack of control over the overseas entity, which can be troublesome if there is a difference in long-term goals between partners. Foreign companies looking at such a venture in India also run the risk of intellectual property dilution, and need to be sure to protect brands, trademarks, etc., and have the proper sublicensing agreements in place.
If you decide a joint venture is for you, bear in mind that being upfront about goals and responsibilities is key for success. A thriving joint venture relies heavily on good communication between both partners to be sure that everyone is on the same page. Take your time, do proper due diligience on potential partners and even consider having your your own local advisor on the ground in India who is dedicated to looking after your interests.