Establish a Joint Venture relationship with a Chinese partner, this can be either an Equity Joint Venture (EJV) or Contractual Joint Venture (CJV).
The EJV is a separate legal entity and has its own assets and liabilities. Each partner is entitled to share in the profits of the venture in proportion to its investment. The non-Chinese investors must contribute a minimum of 25% of the venture's registered capital to qualify as a so-called Foreign Invested Enterprise ("FIE"), which carries certain benefits, such as tax exemptions.
The CJV is organized by means of contract and can be formed in two ways. The first is a purely contractual arrangement whereby each party agrees to undertake certain obligations and provide a certain amount of capital. The agreement sets out the objectives of the venture but can not protect the partners from liability arising from the joint venture's activities. The rights and obligations flow strictly from the contract.
The second type of CJV is only available if the venture satisfies the statutory requirements for establishing a PRC legal person. The venture is treated as a separate limited liability entity, and liability is limited to its total capital. The sharing of profits can be governed entirely by agreement between the parties and need not be in proportion with each investor's investment. Both types of contractual joint ventures must obtain approval from the authorities.
Search for Partner
It is important for the partner to be a legal entity which pursues the same objectives an actively supports the project. Further consideration should be given to the following, transportation infrastructure, the situation regarding production material and supplies, the technical level of the partner, labor costs and availability of staff, the cost of property and rents, tax relief and living conditions for expatriate managers.
Letter of Intent
The feasibility study must be approved by the competent planning authority, namely, SPDC or the local planning and development commission
➤ Pro-registration of the company name
➤ Joint Venture Contract, articles of Association and schedules
➤ Approval and Registration
➤ Completion of Establishment
➤ Organization of the JV
➤ Customs Duties and Taxes
➤ Transfer of Equity
➤ Investments of FIEs
➤ Merger and split of FIEs
AC Consulting can help you to set-up the JV in China, work out the whole process and make sure that all the issue are done on time an with your satisfaction
Audit & Accounting
Accounting records are required to be kept in Chinese or Chinese with English. Annual audit by a local auditor is required. AC Consulting offer full Accounting Service for your company, for more detail, please refers to our Accounting page.
Establish Joint Venture (JV)