Suzhou JV Formation Service
Suzhou JV Formation Service
Hotline: 86-755-82143422 Email: email@example.com
What is the Chinese Suzhou Joint Venture (JV) ?
Introduction of Joint Venture (JV)
In China , in mainland, such as in Suzhou .A Joint Venture is a business arrangement in which the participants create a new business entity or official contractual relationship and share investment and operation expenses, management responsibilities, and profits and losses.The Chinese authorities encourage foreign investors to use this form of company in order to obtain exposure to advanced technology and new management skills.
There are 2 types of Joint Venture:
1- EJV (Equity Joint Venture)
Equity joint ventures are the second most common manner in which foreign companies enter the China market and the preferred manner for cooperation where the Chinese government and Chinese businesses are concerned. Joint ventures are usually established to exploit the market knowledge, preferential market treatment, and manufacturing capability of the Chinese side along with the technology, manufacturing know-how, and marketing experience of the foreign partner.
Normally operation of a joint venture is limited to a fixed period of time from thirty to fifty years. In some cases an unlimited period of operation can be approved, especially when the transfer of advanced technology is involved. Profit and risk sharing in a joint venture are proportionate to the equity of each partner in the joint venture, except in cases of a breach of the joint venture contract.
Share holdings in a joint venture are usually non-negotiable and cannot be transferred without approval from the Chinese government. Investors are restricted from withdrawing registered capital during the live of the joint venture contract. Regulations surrounding the transfer of shares with only the approval of the board of directors and without approval from government authorities will probably evolve over time as the size and number of international joint ventures grow.
2.2- CJV (Cooperative Joint Venture)
A Sino-Foreign Cooperative Joint Venture (CJV) is a joint venture between a Chinese and a foreign company within the territory of China. The Chinese company usually provides the labor, land use rights and factory buildings, while the foreign company brings in the necessary technology and key equipment, as well as the capital. The joint venture is based on a cooperative joint venture contract in which matters like the terms of cooperation, the division of earnings, the ownership of property upon the termination of the contract term of the CJV, the sharing of risks and losses, etc are laid down. The foreign investors could be foreign corporations (including Hong Kong, Macao and Taiwan), individuals or partners, but Chinese investors must be corporations, not individuals.
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