Joint Ventures

In the twenty first century successful business frequently includes the broad benefits and positive synergies that result from the shared assets of Joint Ventures.

Over the past few years foreign companies have been entering into substantial Joint Venture B2B operating agreements in emerging Oil & Gas market jurisdictions, including Thailand.

The companies enter these Joint Ventures in order to grow the scale of their business and capture operational synergies in costs or revenues. These B2B operating agreements also allow foreign companies to diversify their portfolios, establish broad strategic alliances, and combine their assets or establish scale platforms in new markets.

Meanwhile, Joint Venture operating agreements bring new capital to existing domestic businesses, and reduce ownership and risk exposure in certain segments.

Different Joint Venture structures offer different levels of influence and ownership. These structures include (from less integration to more): franchise agreements, long-term purchase or supply agreements, distribution agreements, research and development partnerships, and licensing agreements, as well as shared equity or non-equity relationships (e.g., Joint Ventures) and owned-equity relationships (e.g., merger and acquisitions).

Despite the risks of investing in emerging markets, there are certain key benefits to Joint Ventures with local Thailand companies: foreign companies are able to enter into the Thailand market, and local companies can increase local market competitiveness, particularly with regard to price, delivery schedule and quality requirements.

Joint Ventures allow companies to preserve autonomy, share the investment risk and enhance competitiveness. Small companies can increase their market participation, their know-how and their technology, without making greater Operating Agreements.

However, as these Joint Ventures are complex transactions, they require a careful analysis of each party's aims and objectives. Participants should have clear and common objectives, as well as balanced expertise, B2B operating agreements, and a balanced power over policy & management.