Construction Law in China
Construction Law in ChinaUpdated on Tuesday 19th April 2016
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Foreign businessmen interested in the construction field in China should know that this industry is showing positive prospects; investors who want to expand their business activities in China must be familiar with the construction legislation, which establishes the conditions in which a construction site may carry out its activities. Our law firm in China can offer you assistance for the registration of a company in the field of constructions and can provide you with an in-depth presentation on the local business environment.
Parties involved in a Chinese construction project
Entrepreneurs who want to establish a company in China in the field of constructions should know that the Chinese legislation stipulates that the following entities are to be involved in a construction project:
- project management company;
- project supervising agency, representing the interest of the developer;
- subcontractors, hired by the developer to supply various materials.
Legal entities in the construction field
Investors who are interested to set up a construction company can choose from several legal entities under which they start their operations.
It is advisable to establish a special purpose vehicle (SPV) if the investors have sufficient financial capital; this method is usually preferred by most of the developers who conduct construction projects in the real estate industry.
In the situation in which the developer does not own the necessary capital for the project, he or she can incorporate a company as follows, by including in the project other investors:
• joint venture;
• joint development;
• contractual agreements, signed between the developer and the builder; our Chinese lawyers can provide you with the conditions under which entities can be formed.
Risks of the contractor in China
Any type of construction projects will assume several risks before the commencement of the construction itself. As such, the risks that can be projected in this situation have to be drafted in the contracts signed between the parties involved, specifying the way in which the parties assume liabilities for various aspects of the project, such as the increase in the cost of the materials used, or the increase in the labor costs.
If you need further information on the Construction Law in China, please contact our Chinese lawyers for assistance or legal representation in this sense.