Conflict Analysis of the Nanjing Yuhuan and A.O Smith Joint Venture Case

Purpose –This paper is to study the process of the negative effects of Sino-foreign joint ventures, hoping to find out an effective path in which local enterprises can avoid the risks in the utilization of foreign capital, and ultimately achieve independent innovation. Research design, data, and methodology –The outflow of assets, the loss of local brands and the technology hollowing-out problem brought by joint ventures is becoming more and more serious. Based on conflict analysis graph model, this paper takes Yuhuan joint venture as an example to identify the conflict problem in Sino-foreign joint ventures. Results –The results of the stability analysis show that establishing joint venture cannot really realize the introduction of technology because the technology is fully controlled by the foreign part. So when introducing foreign capital, local enterprises should participate in R&D and master the initiative. Conclusions – Local enterprises should pay attention to patent containment and technology blockade of multinationals. Domestic enterprises should try to protect state-owned assets and local brands in Sino-foreign joint ventures. Independent innovation is the most effective strategy for the development of enterprises in China.