basic-guide-to-exporting_Latest_eg_main_086196

also often a good idea for U.S. licensers to retain qualified legal counsel in the host country, to beable to obtain advice on applicable local laws and to receive assistance in securing the foreigngovernment’s approval of the agreement. Sound legal advice and thorough investigation of theprospective licensee and the relevant practices of the host country will increase the likelihoodthat your licensing agreement will be a profitable transaction.Joint VenturesIn some cases, joint ventures provide the best manner of obtaining foreign trade income.International joint ventures are used in a wide variety of manufacturing, mining, and serviceindustries, and they frequently involve technology licensing by the U.S. company to thejoint venture.Host country laws may require that a certain percentage (often 51 percent or more) ofmanufacturing or mining operations be owned by nationals of that country, thereby limitingU.S. companies’ local participation to minority shares of joint ventures. Despite such legalrequirements, principals in a U.S. company may find it desirable to enter into a joint venture witha foreign company to help spread the high costs andrisks frequently associated with foreign operations. Thelocal partner will likely bring to the joint venture itsknowledge of the customs and tastes of local consumers,an established distribution network, and valuablebusiness and political contacts.There are some possible disadvantages to internationaljoint ventures. A major potential drawback, especiallyin countries that limit foreign companies to minorityparticipation, is the loss of effective managerial control.As a result, you may experience reduced profits,increased operating costs, inferior product quality,exposure to product liability, and environmentallitigation and fines. U.S. companies that wish to retaineffective managerial control will find this issue importantin negotiations with the prospective joint venturepartner and the host government.Do you have a strategy to protect yourcompany’s intellectual property (IP)?• A foreign company can appropriate your intellectualproperty in its home country before your company haseven marketed in that country—or in the United States.• The processes for applying for intellectual propertyprotection differ from country to country.Although effective IP managementshould be a key element of every businessstrategy, it is essential for companiesdoing business internationally.Visit www.stopfakes.gov for more details.Because of the complex legal issues frequently raised by international joint-venture agreements,you should seek legal advice from qualified U.S. counsel before entering into such anarrangement. Many of the export counseling sources discussed in Chapter 4 can help direct youto legal counsel suitable for your needs.U.S. companies contemplating international joint ventures should consider retaining experiencedcounsel in the host country, as well. Since the interests of a prospective partner may not alwayscoincide with your own, relying on a potential partner in a joint venture to negotiate hostgovernment approvals and to give advice on legal issues could put you at a disadvantage.Qualified foreign counsel, however, can be very helpful in obtaining government approvals andproviding ongoing advice regarding the host country’s intellectual property, tax, labor, corporate,commercial, antitrust, and exchange control laws.Chapter 7: Tech Licensing and Joint Ventures87