| Chinese-foreign joint ventures have been playing a dominant role in Chinese automotive industry development. Transnational related party transactions abundantly exist in those JVs, among which there are unfair transactions. In recent years, the study on related party transactions (RPT) regulation has attracted increasing attention from economic and legal fields; however the focus of such study has not turned to automotive JVs till now. Taking the previous theories as study basis, this article presents an overview of various types of RPT in Chinese automotive JVs. Moreover, the in-depth causes of unfair transactions are explained and potential risks to the Chinese partner are indicated; besides, the question on how to build a risk prevention mechanism is discussed as well. The study findings show that the foreign partners dominate JV’s operation by various means and transfer benefits to their mother companies through RPT, so to realize its strategy by exposing the Chinese partner under high risks. In this article, the necessity of RPT in automotive JV’s is recognized; nevertheless, a deeper study and necessary regulation on RPT has to be implemented. Chinese companies should pay more attentions to its supervision and adopt effective prevention measures, so as to maximize its advantages and minimize its disadvantages. Meanwhile, Chinese companies should continuously strengthen its core competence and bridge the gap with foreign companies; only by this can the unfair RPT roots be removed, and Chinese companies’long-term benefits will be protected, furthermore, it will facilitate the strategic objective of Chinese automotive industry to be realized. |
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