Education & Training

Start Your China Joint VentureFor China still has restrictions in certain industries,Website:http://www.chinalegalexpress.com, such as automotive, hospitality, and chemicals, etc, Joint Venture is oftentimes the only investment vehicle to enter the businesses that are largely influenced or controlled by the government.?A joint venture allows the foreign partner and Chinese partner to establish a new business entity or contractual relationship, where both parties share investment and operational cost, responsibilities, and profits and losses. A China Joint Venture allows the Chinese side to access technology, analytics and management skills, and marketing experience. The foreign side, on the other hand, benefits from the manufacturing capability, domestic market treatment, lower labor and production cost, and potentially a significant market share in China.Currently, the minimum investment capital for a Consulting, Service and Hi-Tech Joint Venture is between 100,000 ~ 500,000 RMB. There are two types of joint ventures, respectively equity joint venture (EJV), and contractual joint venture (CJV). The registrations of CJV is rarely chosen, and therefore this article mainly elaborates on EJV.Equity Joint Venture (EJV)Equity Joint Ventures are the second most popular investment vehicle in China, after China WFOEs. It is normally allowed to operate for a fixed period of time from 30 to 50 years. The profit and risks are shared in proportion to the equity that each party contributes. You should be very considerate about your share in the company, as 1) share transfer later on requires government approval, and 2) you are not allowed to withdraw registered capital before the China Joint Venture terminates. Usually, the foreign party should contribute at least 25% of registered capital.?On repatriation of profits made in China, it is advised that the foreign exchange accounts be balanced so that the remitted foreign exchange is offset by exports from the China Joint Venture.