book 2 unit 3 A.pptVIP

Steps in Entering Business in China 3 categories: Foreign equity joint ventures Foreign cooperative joint venture Solely owned foreign investment enterprises Foreign equity joint venture 外商合资经营企业 Sino-foreign equity joint venture 中外合资经营企业 a limited liability company established jointly by companies on the principle of equality and mutual benefit a Chinese legal person The investment of the foreign party ≮25% of the total registered capital share the risks and benefits according to the equity investment→ cash, buildings, machinery, proprietary technologies, and land-use right etc. Foreign Cooperative Joint Venture 外商合作经营企业 Sino-Foreign Cooperative Joint Venture 中外合作经营企业 with contractual nature (established in accordance to the cooperative contract signed by the Chinese and foreign parties) Contract → be subject to Chinese laws to get the approval of Chinese government Should detail items like investment amount, cooperative field, the sharing of risks and losses, the ownership of property ect. the foreign party → all or the larger part of the required capital, technologies and critical equipment the Chinese party → land-use right, labor, services or buildings and materials EJV vs. CJV There are three main differences between an EJV and a CJV: While an EJV is always a legal person, and thus a limited liability company, a CJV can be a legal as well as a non-legal person. The latter option is not very common though because it would mean that the partners of the joint venture would be personally liable for any losses the company might make in the future In an EJV the distribution of profits has to take place equivalent to the ratio of the capital contributions made by the parties, while the distribution in a CJV can take place according to the parties wishes. A CJV is thus a lot more flexible than an EJV. In a CJV a party may, besides contributing registered capital, provide for so-called cooperative conditions (Hence the name Cooperative