A joint venture is a joint venture that is founded and operated by, for example, a German partner together with an Indian partner. A joint venture is an Indian company and therefore has the same rights and obligations.

The typical reasons that supposedly speak for a joint venture in India...

In the past, a joint venture was the most common way to set up a company in India - simply because back then you weren't allowed to operate alone by law - it has become a little out of fashion in recent years. Nevertheless, small and medium-sized companies in particular are still afraid to go it alone in India and usually cite the following arguments:

  • We don't even know each other. I'd rather get a local partner who has the right connections and knows the market.
  • The risk of doing it alone is too great for me, so I want to share the risk with a local partner.
  • I don't have to start from scratch.
  • I met a great Indian man, really convincing. Together with this it will definitely be a huge success!

Let's look at and evaluate these arguments in detail:

Argument number 1: too little market know-how for India

“We don’t even know each other. I’d rather get a local partner who has the right connections and knows the market.”

In “old” India, before economic liberalization, relationships were actually a prerequisite for almost every business activity. No business without a cousin or at least the friend's best friend.

However, this situation has now fundamentally changed; Today, the price and performance of a product are clearly the decisive criteria for a successful business deal.

Of course, relationships are still helpful and their importance is still very high in India, but this is exactly where your chance lies: Indians are characterized by a strong sociability and if you put in a little effort, you can get everything you want in no time Make your own contacts. We'll make a bet, in a few weeks you'll have it and then it'll be your own relationships! And this quickly puts into perspective the value of the relationships “brought” by a joint venture partner. And you are right to ask yourself whether this really warrants a stake in your company.

As I said, the importance of “classic” relationships has declined enormously, but if a business can really only be realized through relationships, we usually talk about “certain favors”, “creative ways” or let’s call it by its name: corruption and personal Enrichment. It also fits that in such cases, many relationships are required - a typical Indian bad habit of involving the entire clan in a contact arrangement and of course everyone wants a piece of the cake.

You have to develop this “market intelligence” yourself!

And now to know the market: You know your product and its application much better than anyone else, and - believe us - the associated market is much more manageable than you initially assume.

Invest in a few weeks of research and discussions with relevant buyers and users and then you will know your market. This even gives you the chance to get a realistic assessment of the market, because information in India is always personal! (See specialist article on the topic: Market analysis India – The wide space between reality and truth)

Even if it takes longer, a time advantage of perhaps a few weeks or months justifies a stake in your company in perpetuity..?

You can find out more about other reasons for a joint venture in India in our next specialist article “The Super Indian as a joint venture partner”.