Wednesday in the Age of Reason-Munchausen (1988)

“The minority partner, a French company named Framatome, became concerned when what it terms an “imminent radiological threat” occurred at the plant. If the plant had been based in France, it would have had to shut down, but China is not France.

The French partner did not publicly call on its Chinese partner to shut down the plant for at least three reasons: (1) there is no faster way to be forced to sell your interest in a Chinese JV at a steep discount than by publicly criticizing your Chinese JV partner that is either an SOE, a subsidiary of an SOE, or closely connected with the Chinese government; (2) there is no way the Chinese JV partner would have responded and taken the necessary steps in the face of a public demand; and (3) it doesn’t make economic sense to criticize your JV partner unless you are sure the relationship is over and you have nothing left to lose except reputational risk.”