The China Venture

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3.2.5.5 Comparison between Investment Vehicles The form of investment chosen is a function of balancing management control with financial exposure 102 : Cooperative Joint Venture Equity Joint Venture Wholly Foreign-Owned Enterprise increased control Chinese Holding Company (see text above) FIGURE 3-4: Management control vs. financial exposure of various investment vehicles 102 The Business Guide to China, Lawrence Brahm, Li Daoran, 1996, p. 17 and China - Wirtschaftspartner zwischen Wunsch und Wirklichkeit, Reisach et al., 1997, p.134. increased exposure 76
Co-operative Joint Venture Status Partner structure May acquire status of legal entity if requirements are met and stated in contract Liability Individual Liability of parties may be limited by parties in their contract Manage -ment If registered as a legal entity Board of Directors must be established at the outset If not established as a legal entity, a joint management committee Capital contribution should be set up Law does not provide for capital contribution ratio between p arties Foreign: usually equipment and technology Chinese: usually labour, land and cash Equity Joint Venture Wholly Foreign-owned Investment Enterprise Corporate structure Status of legal entity Limited liability within limits of parties’ capital Board of Directors Regulate by articles of association Joint management and operation Specific min. on foreign party’s contribution:25% of registered capital Foreign: usually equipment and technology Chinese: usually labour, land and cash Set time schedule for putting up contribution Corporate structure Status of legal entity Liability limited to registered capital Board of Directors Regulated by articles of association Autonomy in operation and management Solely from foreign investors Profits from other JV's in China with permission from authorities Restrictions Nil Nil Advanced technology Export oriented Profit-sharing According to ratio According to capital No sharing, entirely for specified in contract contribution ratio the foreign pocket Termination According to the contract Terms: generally 10-50 years No perpetual succession Specific Flexible structure and Most common for JV's Permit only obtainable features more liberty status than "expected" from Chinese with high-tech production with EJV's side facilities and export of Suitable for small projects min. 50% of manufactured without foreign involvement in management goods TABLE 3-3: Overview of investment vehicles in China The following table gives an overview of the development of forms of co-operation in China: 103 103 China - Wirtschaftspartner zwischen Wunsch und Wirklichkeit, Reisach et al., 1997, p. 135. 77
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The China Venture: Business Environ
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Table of Contents List of Figures .
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3.2.3.2 Special Funds for Setting U
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3.4.1.1 National Culture ..........
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List of Tables TABLE 2-1: THE AREAS
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GBP Pounds Sterling GDB Guangdong D
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1. Introduction: The China Venture
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After a short discussion with the p
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co-operate with other firms, especi
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The Chinese operating legal system
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First of all, Britain’s predomina
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democratic centralism, all governme
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The courts are the state organs exe
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more than three hundred intermedia
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2.2.8 Company Law China’s first n
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Things seem have to become a lot cl
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2.3.1.1 Financial sector developmen
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securities, trading, initial public
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Page 39 and 40: established in January 1996 by 59 p
Page 41 and 42: Chinese Banks Foreign Banks Financi
Page 43 and 44: system formulation has been put on
Page 45 and 46: The separation of production and co
Page 47 and 48: swap centres (see also above). From
Page 49 and 50: investors with little experience an
Page 51 and 52: them, while a branch with a shortag
Page 53 and 54: Loans, public offerings of shares,
Page 55 and 56: is often to acquire foreign capital
Page 57 and 58: 2.3.3.2 Debt financing As getting t
Page 59 and 60: the approval of special authorities
Page 61 and 62: control compared to national enterp
Page 63 and 64: usiness in China and related issues
Page 65 and 66: 3. Pre-Entry Strategic Consideratio
Page 67 and 68: While the testing for the general r
Page 69 and 70: of relevant contacts to suppliers a
Page 71 and 72: partner companies with free servici
Page 73 and 74: strengths which his own company lac
Page 75 and 76: Central Committee of the Communist
Page 77 and 78: environment for foreign investment
Page 79 and 80: legal and regulatory environment of
Page 81 and 82: 3.2.4.3 Legal Framework for Foreign
Page 83 and 84: • China’s entry into membership
Page 85 and 86: • stipulates that advanced techno
Page 87: Government approval. Foreign invest
Page 91 and 92: Reflecting on these points the foll
Page 93 and 94: Success Factors concerning Products
Page 95 and 96: Success Factors concerning Company
Page 97 and 98: high-technology are eligible for th
Page 99 and 100: Available Distribution Channels A m
Page 101 and 102: Available Distribution Channels Mar
Page 105 and 106: Illustrative Case Studies The follo
Page 109 and 110: Which Aspects should SME's Focus on
Page 111 and 112: Strategy No. 1: Have Cash A comfort
Page 113 and 114: expenses have a detrimental effect
Page 115 and 116: As a conclusion, network oriented m
Page 117 and 118: 3.2.13 Case Study: Swisstec, Lyss 3
Page 119 and 120: factor which makes the foreign firm
Page 121 and 122: developed within the SME, its impac
Page 123 and 124: 3.3.1.3 The Role of Technology Mana
Page 125 and 126: Indirect export and direct export a
Page 127 and 128: maintenance or the use of establish
Page 129 and 130: Government Central Exploiting Sales
Page 131 and 132: in the most advanced provinces and
Page 133 and 134: network through which the products
Page 135 and 136: Siemens or Motorola, they may have
Page 137 and 138: Chinese partners. He also began to
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orders. However, a country may also
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Germany/Switzerland China democrati
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3.4.2.4 Conversation at the first m
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only after a certain time and even
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3.4.3 Experiences of European Compa
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ones who atte nded a course. They s
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Another Chinese tactic is, as menti
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4. Post-Entry Strategic Considerati
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and the other one in China. The com
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experience in operating production
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In these two cases, the companies m
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5. References Aharoni, Y. (1966): T
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Dony, A. G. (1998): Market Entry St
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Islam, I. / Chowdhury, A. (1997): A
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Madura, J. (1993): International Fi
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Semkow, B. W. (ed.) (1995): China F
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6. Appendix 6.1 Fact Sheet People
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