A JV business allows Chinese partner participation. Within the past, the Chinese Government mostly encouraged that businesses become setup as it can get in new technologies, skills, management and expertise to China. In general, JV is the quickest method to align up a business in the land of China. As for WFOE and consultant office, the company nature should be approved by the Government before registration.
You will find two kinds of joint ventures in China: (1) Equity Joint Venture and (2) Cooperative Joint Venture.
(1) Equity Joint Venture
Mainland China Business Registration
This joint venture is popular in manufacturing business, whereas a limited liability business is started for such a function. In essence, the distribution of profits of equity joint venture is subject towards the percentage of total capital invested. If the foreign partner invested 49% of total invested capital into JV, it'll get 49% worth of dividends.
(2) Cooperative joint ventures
Cooperative Joint Ventures are more flexible. They are established either as a limited risk business or as a non-legal person; whereas subject to limitless risk. If it isn't a limited risk business, the JV partners are liable for any losses the JV incurrs. We highly recommend Cooperative Joint Ventures to become established as limited liability businesses.
Before registration of a JV business, a Joint Venture Agreement needs to be in place, specifying the range of organization, total capital investment number, share percentage, period of licence, distribution of profits and termination arrangements. All of the JV firms include a period of licence. If the JV business contains achieved the date of completion and the JV licence isn't renewed, the JV parties need to follow the Joint Venture Agreement to distribute the profits.
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