Pushing the implementation of SABIC’s international joint venture plan in China opens a lot of business opportunities by enabling SABIC penetrate the market of China within the shortest possible time. Likewise, this strategy could benefit SABIC through economies of scale, cheaply expand the business internationally, increase profit by diversifying its risk management portfolio, improve SABIC’s market power and competitive advantage against its global competitors. Despite the business opportunities behind the international joint venture project, the strong government control in China on top of the market saturation and the differences in the way Chinese people do business could lead to a long-term business failure.
To improve SABIC’s internationalization strategies, the company should carefully analyze the current social, political and economic situation in China aside from selecting the right business partner, implementing a proper cross-cultural management, and selecting the best options for international joint ventures.
In relation to the tight competition in the global markets, some of the Gulf Cooperation Council (GCC) based chemical companies entered into mergers and acquisitions (M&A) or joint venture as a way of expanding its businesses around the world. For the reason of easy access to domestic and international market, easy access to technology transfer, and product diversification; Saudi Basic Industries Corporation (SABIC) has been continuously entering into joint venture projects with other local and international companies (Arab News 2007).
Established back in 1976, SABIC managed to expand its business by going through a series of joint venture. Today, the company is known as one of the biggest and most profitable petrochemicals manufacturing company based in Riyadh (SABIC, 2010a). Other than manufacturing chemicals, SABIC also manufacture polymers and innovative plastics, fertilizers, and metals