Cooperative Arrangements
Cooperative Arrangements
Because they want to gain Western products and services with high-technology and management skill inputs and, at the same time, minimize the outflow of hard currencies, HPEs prefer arrangements by which they license Western technology, have a Western firm build and/or run the establishment for them under turnkey or management contracts, or participate in joint venture arrangements. Of particular interest are the coproduction arrangements, which involve having a Western firm provide equipment, technical input, or management for a plant owned by HPE partners in exchange for a portion of the output or output from another HPE plant. For instance, Siemens, a German equipment manufacturer, receives telephone relay equipment in Bulgaria in exchange for providing a telephone system.
Even when HPEs allow 100 percent ownership by Western foreign investors, the Western firms generally prefer joint ventures. The regulatory and bureaucratic environments within HPEs are sufficiently complex that local assistance is desirable. For. example, different ministries may be able to delay actions because of their diverse control of supplies, convertible currency permits, transport, and environmental issues. There are, however, some wholly owned foreign investments, such as ones by 3M and Hilton in China.
Western companies increasingly realize the complementary nature of their resources with those of firms in HPEs. By combining these resources in other countries, companies may gain considerable economic advantages. For example, CIS, German, and Austrian firms have jointly constructed a power station in Iceland; Chrysler's joint venture with partners in Egypt assembles Belarus tractors for a CIS firm
Because they want to gain Western products and services with high-technology and management skill inputs and, at the same time, minimize the outflow of hard currencies, HPEs prefer arrangements by which they license Western technology, have a Western firm build and/or run the establishment for them under turnkey or management contracts, or participate in joint venture arrangements. Of particular interest are the coproduction arrangements, which involve having a Western firm provide equipment, technical input, or management for a plant owned by HPE partners in exchange for a portion of the output or output from another HPE plant. For instance, Siemens, a German equipment manufacturer, receives telephone relay equipment in Bulgaria in exchange for providing a telephone system.
Even when HPEs allow 100 percent ownership by Western foreign investors, the Western firms generally prefer joint ventures. The regulatory and bureaucratic environments within HPEs are sufficiently complex that local assistance is desirable. For. example, different ministries may be able to delay actions because of their diverse control of supplies, convertible currency permits, transport, and environmental issues. There are, however, some wholly owned foreign investments, such as ones by 3M and Hilton in China.
Western companies increasingly realize the complementary nature of their resources with those of firms in HPEs. By combining these resources in other countries, companies may gain considerable economic advantages. For example, CIS, German, and Austrian firms have jointly constructed a power station in Iceland; Chrysler's joint venture with partners in Egypt assembles Belarus tractors for a CIS firm
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