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What Are International Joint Ventures?

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  • Written By: Laura M. Sands
  • Edited By: Heather Bailey
  • Last Modified Date: 14 September 2016
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International joint ventures are business partnerships which exist between one or more companies that are based in different countries. These international business agreements enable companies to focus on common business goals, pool resources and share in business profits. Some are also useful in supplying humanitarian aid to countries in need. International joint ventures give foreign companies broader access to commerce and communities outside of their home country.

Companies with an interest in increasing profits, expanding territories and attracting new customers will often forge joint ventures with companies in other countries hoping to do the same. Such partnerships are created as legal business entities considered to be separate from each company’s primary business. An international joint venture (IJV) is subject to all applicable international business laws and statutes.

Underdeveloped countries, in particular, welcome these international ventures as a way to increase commerce and trade. IJVs in developing countries often stimulate local economies and bring greater investment opportunities to struggling business communities. This particular type of joint venture (JV) commonly provides increased employment opportunities for local citizens, as well. Often, international joint ventures are even bound by certain jurisdictions to provide local jobs as a stipulation of doing business in a particular country.

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A few of the advantages commonly associated with international joint agreements include growth opportunities, increased investment opportunities and a strengthening of foreign relationships. For the countries where IJVs are providing services or products, the benefits typically include job creation, skills training and the acquisition of new technology in addition to new local revenue streams. For businesses, governments, laborers and common citizens, IJVs are often a welcome opportunity to create and strengthen professional relationships.

One of the primary reasons international joint ventures are formed is to pool business resources to achieve a common objective. In doing so, businesses also aim to decrease capital risks as much as possible by sharing in investments, building and the time needed to create a new business infrastructure. A sharing of equity and profits are decided upon in the early stages of this type of business agreement, and all parties are bound by international law to adhere to these agreements.

Governments and non-governmental agencies frequently engage in international joint business agreements to assist struggling foreign economies. Often such economies are experiencing extreme economic issues due to civil unrest or natural disasters. In partnering with companies already working to assist local communities, foreign governments and agencies can lend resources and manpower to help countries recover from such circumstances. These humanitarian efforts are often funded by private citizens willing to donate money and other resources to the entities involved in the joint venture in order to support their efforts abroad.

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