A Chinese joint venture is a business that is created between more partners who share business goals and will divide the expenses, profits and losses between them. This is a common business form between a Chinese partner and a foreign company. Equity joint ventures and cooperative joint ventures can be established in China.
Joint ventures established in China are subject to the Laws of the People’s Republic of China and the law for foreign investments. Such establishments are prohibited from functioning on Chinese territory if they violate the Chinese law, if they do not comply with the requirements for aiding the country’s economic development of if they are found to be detrimental to the environment.
Joint business partnerships in China
The equity joint venture is a popular way for a foreign investor to enter the Chinese market. This is common when a foreign investor decided to provide its know-how, technology, and experience to a Chinese company that is already established on the market and has manufacturing capabilities. The arrangement between a non-resident company and a local one is concluded for a fixed period of time, usually a maximum of fifty years. The equity can include monetary contributions, materials, equipment or buildings, intellectual property rights.
In the contractual joint venture, the companies that wish to cooperate can bear liabilities separately, as opposed to being treated as a single legal entity. This type of business can be registered as a limited liability company.The minimum share capital for the Chinese joint venture varies and can have a different value according to the business field. Our lawyers in China can give you more details about these preliminary requirements and other business options like the Partnership Enterprise.
We invite you to watch the video below for complete information about how joint ventures are set up in China:
Joint venture incorporation in China
Joint ventures in China can start their registration following an examination and approval from the Chinese Ministry of Foreign Economic Relations and Trade. The documents needed for establishing a Chinese joint venture include:
-joint venture agreement between the two companies;
-list of candidates for managerial positions and other company documents, if requested.
Under Chinese law, the joint venture is allowed to do business according to the scope of the company and within the applicable Chinese laws, by implementing its own articles of association. If you would like to do business with a Chinese company and are interested in forming a joint venture, our lawyers can help streamline the process and help you in relation to Chinese authorities and businesspersons.