Joint Venture Registration
Another way to enter the Chinese market is via a Joint – Venture (JV). In China, a JV is a form of enterprise created through the partnership between foreign and Chinese investors. The joint venture partners share the profits, losses and management of the JV.
Joint Ventures in China
There are two main reasons to enter into a JV with a local partner, 1) When entering certain industries requires a local partner as outlined in the PRC Foreign Investment Industrial Guidance Catalogue, 2) When a local partner can offer tangible benefits such as well-established distribution channels, government relations (locally known as guanxi) or other assets that would be relatively inefficient for the foreign investors to acquire on its own.
Joint Venture Types
Equity Joint Venture (EJV)
An EJV is a Chinese Limited Liability Company (LLC) shared between a Chinese and a foreign party. Each participant contributes to the venture in financial terms by way of an investment of capital and has a stake in the business. This is similar to the holding of shares in a limited liability company.
Cooperative Joint Venture (CJV):
A CJV offers a flexible way to conduct business with a Chinese partner. This legal framework allows individual agreements such as profit sharing, which need not be restricted to the equity contributions. It differs mainly with the Equity Joint Venture in that the foreign investor may repatriate his original investment before the expiration of the Joint Venture.
Depending on your business scope, we can advise you whether a JV is the best option for you. We will be glad to answer your questions and find the right solution for your company. Compared to registering a business in most Western countries, registering a business in China is challenging work filled with paperwork and bureaucratic red tape. It is time-consuming and challenging to properly complete the registration process without a qualified agency. Corporation China is a government licensed registration agency that provides business registration services. We offer practical solutions for corporate formation with our extensive knowledge and background, all while guaranteeing results for our clients.
If you are still unsure about the disadvantages of a JV then a Wholly Foreign Owned Enterprise (WFOE) might suit your business better. Please take a look at our WFOE pages under Company Formation for more information.