But this JV may well have outlived its usefulness. Zhong-Lian is similar to many other joint ventures in that its problems are partly due to its success. But the parties increasingly found that their objectives were incompatible. The partners eventually agreed to restructure the venture so that Astra had control, and Merck would receive payments based on the sales of future products. Heartland should consider establishing a portfolio of joint ventures.
That would reduce the risk associated with any one partner. The answer appears to be yes. Heartland Spindle is focused on short- to medium-term financial returns and on transforming Zhong-Lian into a high-quality manufacturer. No amount of discussion is going to reconcile their differences. If he concludes that the status quo is not viable, Mike must ask himself a second question: How can he restructure or exit the JV in a way that makes sense for Heartland? To answer, he must take into account any termination or exit clauses in the joint venture agreement.
Mike would be well advised to investigate several options in parallel. A phased exit in which Heartland reduces its ownership stake over time could make sense if Heartland wants to minimize disruption in the relationship; it might also make it easier for Suzhou to raise capital if this is a constraint. The partners might also wish to consider an IPO, assuming that Zhong-Lian is sufficiently developed to make this option realistic.
An IPO would give Heartland an exit while providing the joint venture access to capital to continue its growth. Heartland should consider establishing a portfolio of joint venture relationships in China and other low-cost regions. That would allow the company to diversify its sourcing relationships, reducing the risk associated with any one partner.
It would also allow Heartland to upgrade its skills in establishing and managing international joint ventures. Heartland Spindle entered the China market at the same time many multinationals did, about a decade ago, seeing the same enormous opportunity. The market was huge and there was undercapacity in many segments and industries, so high margins seemed assured.
But that was a shortsighted and static view of the market. As the multinationals rushed in and productivity quickly improved, the immediate result was a dramatic expansion of capacity, and margins deteriorated. Many foreign executives said that if they were to move into China again, they would do so through a solely owned business, not a joint venture.
Heartland also went the usual route of entering China by means of a joint venture. Many multinationals chose this path because of regulation requirements, others because of their unfamiliarity with the Chinese business landscape. Many of them have come to regret that decision. In a McKinsey survey of executives of foreign companies in China three years ago, a great number of respondents said that if they were to move into China again, they would do so through a solely owned business, not a joint venture. The survey also found that more than half of the joint ventures in China are not working properly.
The textile industry in China is extremely competitive and will be for the foreseeable future because the entry barriers are low. The margins in textiles are therefore typically very low, except for special textiles and products with very strong brands. The next question is whether this joint venture is in a position to capture the highest margin in its industry. Does it have a unique business model, perhaps, based on some core competence?
Maybe it can leverage its channel or its brand back in the United States or in other developed markets. But if he believes such a return is achievable, he needs to restructure the JV to get there. Mike also needs to ensure that he is linking compensation packages to performance. Zhong-Lian is under the strong influence of the government, and, as a result, it is doing exactly what should be expected: creating jobs and boosting revenue rather than profits. The minute Mike starts to create a market-driven and value-creation-driven company—largely by rewarding senior managers for gains in those directions—things will start to change.
The joint venture is already one of the success stories on the Chinese business landscape. If the venture is restructured and incentives are aligned with higher performance, it might even meet the expectations Heartland has set for it. Paul W. So where is the problem? Is it in the Chinese market itself? Is it with the partnership agreement? Or is it with Mike? Many foreign companies are finding it tough to generate acceptable profits there. Even the Japanese, historically the biggest investors, are seeing their lowest returns in China. China is also becoming a more expensive place to do business.
Between and , the consumer price index in the United States increased by 1. Wage rates in Shanghai more than tripled between and One of the largest costs in many joint ventures is the expatriate manager package. Perhaps he could save by reducing the number of expats. Next, the partnership. In any international joint venture, the partners must share congruent performance measures.
That is certainly not the case here. While both partners have an explicit goal that the JV be profitable, they differ widely in terms of what constitutes an acceptable financial return. Furthermore, some of their nonfinancial goals for the JV seem to have evolved and have only now become explicit.
It wants to grow the scope of the JV and establish a national brand. The U. In the absence of congruent performance objectives, the joint venture has no underlying strategic logic. Thus the partners immediately need to revisit both their older and continuing reasons for staying together. If the partners cannot agree on a minimally acceptable ROI or that such a goal is a top priority, they should think about exiting the venture. Finally, Mike is part of the problem.
It is absolutely stunning that he learned on the day of the anniversary banquet that his partner wanted to make another acquisition. Either the Chinese partner is out of control or Mike is out of touch. How much time is Mike spending with the partner? Has he grown too comfortable in paradise?
Mike needs to be proactive. Rather than simply waiting for his Chinese partner to hand him the names of acquisition candidates, for instance, he could develop specific acquisition criteria with his partner or even conduct some investigations himself. Thanks for the share. Price your products for your market and your level of perceived qualification. I see people who put up a site and create a new product for a few hundred bucks.
They have a few articles, a few articles copied from other sites, and a sidebar full of affiliate ads. The level of authority really is an important part of it all. You gotta have something to say. Making money from blogging is not that easy, it requires a lot of hard work and perseverance, but most newbie bloggers get easily frustrated with blogging when they put in some measure of hard work without getting a commensurate result regarding income. So it is very important for bloggers just starting off in blogging to tone down their expectations in terms of generating income at the initial stage and it is not also advisable to blog full time at this point, having a part-time job that will help pay the bills will be ideal until the blog picks and starts generate enough income.
Hey ramsay, your blogs makes me happy everyday because i always gets something new on it. Inspiring from you I have decided to start a Blog with my own website or Domain name. Ramsay, you are a master in this. I know you have an easy solution for me. So, can you suggest me something? Regards, Pradeep from India. I think the best solution is to write about something you know and love. Figure out a way to solve problems for people. Almost every topic has big traffic if you can do that well. Thanks man…!! I do studies Mechanical Engineering and currently a student of 2nd year.
I will try to provide solutions to people by writing my Blogs. Thanks again man…!!! I love how brilliant and full of information your articles are. They are easy to read and mind opening that you are drawn in, kind of like the Matrix. Amazing post Ramsay. I landed on your blog for the first time today and found it really interesting.
I am a beginner to blogging and found this guide very useful. You have indeed come a long way and please keep on being a blessing to some of us.
I agree on the part time job bit. Because virtually all my blogging struggles — early on, and well into my online career — were rooted in doing dumb stuff cause I feared losing all my money. I think you deserve for all your success now. As appretiation for your time and all efforts that you have done i will subscribe. Great guide. I would like to learn more amazing ideas from your blog. Love to be here. Thanks Ryan for a beautiful update. Thanks for such a great post!
It would be an honor if you ever have time to drop by my blog! Hey Heather. Congrats on the big instagram following! That is where the long term success comes from, in my experience. Great post, Blogging is one of the best platform where people could earn money and possible only by hardwork. Thanks for the tips! I just started by blog last month and am deciding the route I want to go for monetizing. I appreciate your opinion against using it, my feelings are similar. I also really like your infographic. Did you create that yourself or pay someone else to? I would be interested in how to go about making something like that.
I was curious about what kind of post would you come up with, as compared to others who throw all sorts of advice at beginners. This one is exceptional and genuine. Thanks for being honest and suggesting those realistic ways! Yet, the idea of using ads still confuses me. I doubt if they can really cause any significant harm to the reputation or repel audience? Hey Ramsay, Really a great work buddy. Many newbies looking for such articles for finding the right ideas and guideline. And you are helping them a lot with your valuable guides.
Keep This Continue, Thanks again bro. Hi John. Thank you. People are impatient and wants to earn money online very fast some of them get lucky while others never make a single penny. This guide will be helpful for those guys who want to earn even when they have brand new website.
Great read here. Me too, i have to rethink my monetizing strategy for my one week blog. I have been feeling discouraged and burnt out, but I feel like this has given me some direction and a bit of hope. I took part in your recent survey and it seems this article has picked up on some of the most common challenges that newer bloggers were facing definitely applies to me!
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One of the ideas in this article seem like a good fit for me, and thanks to your great cross-linking to other posts of yours, I got much more detail to help me out. One of my biggest struggles lately has just been mental — I am having trouble getting myself to actually create content or really do anything with my blog. By the way I am on my 2nd blog now, I abandoned my first one since I began to feel like I was going in the wrong direction and I started to hate it. Anyway, I wanted to thank you for your great content.
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You are one of my favorite bloggers and I always feel uplifted when I hear from you and check out your posts. It can be hard. Have you got any specific goals with a timeline written down? I find that can make a huge, huge difference. Currently, I do not have specific goals written down, nor do I have any idea on timelines. I feel foolish for not following the most basic goal-setting tactics you are suggesting. What I do have, is a gigantic list of hundreds of ideas, tasks, resources, etc that I dumped into Asana over a long period of time, which is more overwhelming than it is helpful.
Trouble in Paradise
I know generally what I want, but I have no clue how to get from where I am to where I want to be. Ramsay, great infographic! There is so much competition out there for eyeballs. That is for sure! The one thing I struggle with most is getting traffic to my website and getting people to sign up for my mailing list. I have an offer for a free ebook, but nobody seems to be reacting to it. That aside, great article. I post a link to one of my blog posts five times a day on three social media sites, and every one of those posts sends several hundred visitors to my blog. And when I promote an ebook social media actually converts better than Google.
Just something to think about. Good luck with growing your email list and traffic level! Google and Facebook have sent equal amounts of traffic to my blog. I believe getting discouraged and giving up too soon is the primary source of failure for most aspiring bloggers. Of course there are exceptions, due primarily to the work ethic of the aspiring blogger. I can usually tell which people will succeed and which ones will fail before they even get their blog online. But if they see it as a way to build a long term cash income stream they will.
Hi Ramsay, your story is very similar to mine. It pays very little, and if you could instead collect an email from the action taker then you have an average potential of far more than pennies. Thanks for your post! I think one of the biggest concerns for a lot of bloggers is earning.
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Thanks Ramsay, as always for sharing relevant and useful content. IT spending: a brief history. Less bang for the IT buck. Show me the productivity. Too much of a good thing. Business—lean and simple. Offshoring: the new trend. Cutting the IT budget down to size. The four paths of IT spending. Reaching the Path of Profits. About the author A year veteran of the IT industry, Erik Keller is currently a highly sought-after consultant and speaker.
Technology Paradise Lost eBook added to cart. Total: Don't refresh or navigate away from the page. Gojko Adzic. Naomi Ceder Foreword by Nicholas Tollervey. Becoming Agile Greg Smith and Ahmed Sidky. Iain Shigeoka.