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Joint Venture Company Registration is a legal entity formed between two
or more parties to undertake an economic activity together. The JV parties
agree to create, for a finite time, a new entity and new assets by contributing
equity. They then share in the revenues, expenses and assets and
"control" of the enterprise. CHINESE PARTY should be enterprises.
Joint Venture Company
Registration-Major Types of JV in Shanghai
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.
Equity can include cash, buildings, equipment, materials, intellectual
property rights, and land use rights but cannot include labor. The value of any
equipment, materials, intellectual property rights, or land use rights must be
approved by government authorities before the joint venture can be approved.
After a joint venture is registered, the entity is considered a Chinese
legal entity and must abide by all Chinese laws. As a Chinese legal entity, a
joint venture is free to hire Chinese nationals without the interference from
government employment industries as long as they abide by Chinese labor law.
Joint ventures are also able to purchase land and build their own buildings,
privileges prevented to representative offices.
2. CJV (Cooperative
Joint Venture)
In a Sino Foreign Cooperative Venture (also known as Contractual Joint
Venture), the parties involved may operate as separate legal entities and bear
liabilities independently rather than as a single entity. A cooperative venture
may also be registered as a limited liability entity resembling an equity joint
venture in operation, structure, and status as a Chinese legal entity.
There is no minimum foreign contribution required to initiate a
cooperative venture, allowing a foreign company to take part in an enterprise
where they preferred to remain a minor shareholder. The contributions made by
the investors are not required to be expressed in a monetary value and can
include excluded in the equity joint venture process can be contributed such as
labor, resources, and services. Profits in a cooperative venture are divided
according to the terms of the cooperative venture contract rather than by
investment share, allowing a more flexible schedule for return on investment in
cases where one investor provides cash while the other party's investment is
primarily in kind.
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