The China Venture
The China Venture
The China Venture
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Co-operative Joint<br />
<strong>Venture</strong><br />
Status Partner structure<br />
May acquire status of<br />
legal entity if<br />
requirements are met and<br />
stated in contract<br />
Liability Individual Liability of<br />
parties may be limited by<br />
parties in their contract<br />
Manage -ment If registered as a legal<br />
entity Board of Directors<br />
must be established at the<br />
outset<br />
If not established as a<br />
legal entity, a joint<br />
management committee<br />
Capital<br />
contribution<br />
should be set up<br />
Law does not provide for<br />
capital contribution ratio<br />
between p arties<br />
Foreign: usually<br />
equipment and technology<br />
Chinese: usually labour,<br />
land and cash<br />
Equity Joint <strong>Venture</strong> Wholly Foreign-owned<br />
Investment Enterprise<br />
Corporate structure<br />
Status of legal entity<br />
Limited liability within<br />
limits of parties’ capital<br />
Board of Directors<br />
Regulate by articles of<br />
association<br />
Joint management and<br />
operation<br />
Specific min. on foreign<br />
party’s contribution:25%<br />
of registered capital<br />
Foreign: usually<br />
equipment and technology<br />
Chinese: usually labour,<br />
land and cash<br />
Set time schedule for<br />
putting up contribution<br />
Corporate structure<br />
Status of legal entity<br />
Liability limited to<br />
registered capital<br />
Board of Directors<br />
Regulated by articles of<br />
association<br />
Autonomy in operation<br />
and management<br />
Solely from foreign<br />
investors<br />
Profits from other JV's in<br />
<strong>China</strong> with permission<br />
from authorities<br />
Restrictions Nil Nil Advanced technology<br />
Export oriented<br />
Profit-sharing According to ratio According to capital No sharing, entirely for<br />
specified in contract contribution ratio the foreign pocket<br />
Termination According to the contract Terms: generally 10-50<br />
years<br />
No perpetual succession<br />
Specific Flexible structure and Most common for JV's Permit only obtainable<br />
features more liberty status than "expected" from Chinese with high-tech production<br />
with EJV's<br />
side<br />
facilities and export of<br />
Suitable for small projects<br />
min. 50% of manufactured<br />
without foreign<br />
involvement in<br />
management<br />
goods<br />
TABLE 3-3: Overview of investment vehicles in <strong>China</strong><br />
<strong>The</strong> following table gives an overview of the development of forms of co-operation in<br />
<strong>China</strong>: 103<br />
103 <strong>China</strong> - Wirtschaftspartner zwischen Wunsch und Wirklichkeit, Reisach et al., 1997, p. 135.<br />
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