Among the ways a U.S. company may try to increase its presence in China is to engage in strategic cooperation with a Chinese company. An example of this is currently occurring in the airline industry. Specifically, U.S.-based American Airlines and China-based China Southern Airlines are in the process of developing a strategic cooperation.
As part of these efforts, a deal has been reached in which American will buy a minority share (a 2.76 percent stake) in China Southern.
The other parts of the cooperation are still in the works. Things that it is expected to involve include:
- Staff exchanges.
- Code sharing.
- Collaboration regarding customer loyalty programs.
- Collaboration when it comes to sales.
There are various regulatory approvals that will be needed for both the minority stake agreement and other aspects of the cooperation. One wonders what will happen in the regulatory approval process and what impacts the cooperation will prove to have.
As this matter illustrates, complicated issues (such as regulatory issues) can arise when it comes to going the strategic cooperation route to trying to build a bigger business presence in China. When navigating regulatory matters, contract matters and other issues in relation to forming a business partnership with a Chinese company, a U.S. company may want to have the help of an experienced attorney who understands the unique issues and complexities of U.S.-China business dealings. A U.S. business can have a lot riding on U.S.-China business dealings. So, avoiding legal missteps when it comes to such dealings can be critical.
Source: The New York Times, “American Airlines Buys China Southern Stake as Traffic Booms,” Neil Gough, March 27, 2017