the attraction of doing business with people we had done business with in the past" and because the family who owns AFAI ".
Although part of the shipbuilding industry, these joint venture partners of AFAI are not currently direct competitors of INCAT.
This opened up a niche market, which meant AFAI gained valuable skills in the areas of repair, maintenance, and conversion of highspeed ferries, as well as developing an intimate knowledge of the market.
INCAT's significant buying power and favorable trading terms makes it an attractive partner, providing lower component costs, than AFAI might otherwise be able to attain.
The new arrangements between AFAI and INCAT are an extension of their previous licensing agreement.
INCAT has agreed to bear all costs in relation to the supply of equipment and components to AFAI until the vessel is eventually sold.
Neither INCAT nor AFAI has attempted to restrict the contribution of each partner under the current arrangement as explicitly as might be expected, with both parties agreeing to contribute, within reason, whatever is necessary to construct 'k-class' vessels for the world market.
An approach to contracting that is based more on trust between INCAT and AFAI than explicit legal instruments is evidenced, to some extent, by the decision of the parties to not sign the current agreement, as was also the case with the earlier licensing agreement.
Although the actual process of drafting the unsigned agreement may have facilitated the development of trust and understanding, the long-term relationship between INCAT and AFAI appears to have been pivotal to the operations of the venture.
Although INCAT has invested significantly in computer technology and established electronic links with the AFAI shipyard in China which enable communication via email and the electronic transfer of drawings and other documents, it has not engaged in conventional modes of protecting its intellectual property, such as the registering of patents or designs.
As noted abov e, both INCAT and AFAI qualify their relationship: it is not characterized by unbounded trust, and trust and guanxi can be both built and eroded.
