As certain Chinese markets liberalise and allow foreign investors, the local expertise offered by Chinese joint venture partners could prove invaluable. For individual investors a passport copy is required (certified by the Chinese Embassy), Capital credit certification from each investor’s bank, Copy of passport for (i) JV’s director, (ii) JV’s legal representative, and (iii) JV’s supervisor, Leasing contract for office space in China, certification of real-estate ownership, landlord’s identification, Letter of authorization (authorizing the JV to accept service in China on behalf of the investor(s)), In some cases, latest annual audit report from the foreign investor provided by a certified public accountant, Any prior reviews or approvals from government branches (for example land-use rights if required), Record establishment of the business and official seal engraving with the Division of Entry & Exit Administration of the local Public Security Bureau, Obtain certificate with the organization’s code number from the Technical Supervision Bureau, Register with and obtain certificates from both the state and local, Tax reports should be submitted to the Tax Administration Department on a monthly, quarterly and annual basis, Register with and obtain a certificate from the, Obtain certificate of financial registration from the local Finance Bureau. The MOC application should include the following documents: Project proposal briefly describing the JV, Feasibility study setting out the JV’s investment size and purpose, operational and management structure, number of employees, utility requirements such as power and water, brief description of supply and distribution network, brief estimate of revenues and expenses, Certificate of incorporation or equivalent of the corporate investor(s) (certified by the Chinese Embassy or equivalent overseas). Joint Ventures (JV) are one of the corporate structures available to foreign investors to invest in and have access to the Chinese market. Once the partners are chosen, several documents need to be drafted or obtained, including the following: After the foreign and Chinese counterparts reach an agreement on establishing a joint venture together, a letter of intent (LOI) should be drafted. Once the above documents are ready and accepted by the AIC, the Municipal Commission of Commerce (MOC) will issue a formal approval letter in favor of the Joint Venture incorporation assigning the entity an enterprise code. For the Service industry, it should be no less than USD 100,000, and the manufacturing industry is no less than USD 150,000. For more specific information or questions related to your foreign invested enterprise, please contact us. The Foreign Investment Law has been widely promoted as a framework that will emphasize equal national treatment of foreign investment, putting foreign investors on equal footing with domestic investors in the Chinese market and giving them equal protections. In addition to filling annual taxes, JVs must submit an annual audit report to the AIC. All rights reserved, Entering a new or emerging market with a local ready-made structure, Increasing efficiency by combining assets and operations, Sharing risk in complex and bureaucratic investment projects, Approaching skills, capabilities, and other tangible benefits that only a local structured partner could offer. China to drop 50:50 rule and allow foreign majorities in joint ventures 18 April 2018 China is to allow foreign vehicle manufacturers to own more than 50% of their joint ventures with domestic companies, removing a two-decade restriction and giving a boost to business seeking to capture a share of the world’s biggest vehicle market. Existing joint ventures incorporated before the discussion and implementation of the Foreign Investment Law now have a five-year transition period to proceed with the changes required in their current corporate structure. Both documents need to be in written forms and must be signed by all partners. The Canadian Trade Commissioner Service in China has prepared this report based on primary and secondary sources of information. The standard fate for joint ventures in China is that once the Chinese JV partners either believe they no longer need their foreign joint venture partner or simply no longer want to share in the JV spoils with their foreign JV partner, they will work to drive the foreign partner out of the venture. Hawksford is an established provider of company registration and outsourced corporate services in China. While preparing the incorporation steps, investors need to select a leased office space for future business operations and to domiciliate the corporate entity. In November 2018, the company announced new Chevrolet models for the Chinese market, including an extended-wheelbase Malibu XL, a new Chevy SUV concept a new Monza. Once the approval certificate has been received, investors must apply and register for a business license with the AIC. Goldman Sachs plans to acquire 100 per cent of its mainland Chinese joint venture, the latest global bank to seek full control of its business as Beijing further opens up the financial sector. The latter makes numerous cars in China in four factories, especially Buick, but also some Chevrolet and Cadillac models, in a 50/50 joint-venture with SAIC Motor, formerly known as Shanghai General Motors Company Ltd. This article introduces how to establish a joint venture in China, including basic requirements, procedures, and timeline. Equity Joint Venture (EJV) The Equity Joint Venture (“EJV”) is probably the most common of the foreign investment vehicles in China. When receiving the approval of the project proposal, a feasibility study shall be prepared by both parties. Article 25 The accounting vouchers, books, statements and reports adopted by joint ventures shall be kept in the Chinese language, or in both Chinese 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. EJVs are governed by the Law of the People's Republic of China on EJVs Using Chinese and Foreign Investment. The JV’s investors must pay 15% of the registered capital of the JV within the first three months after issuance of the business license (similar to a certificate of incorporation under Canadian law), with the balance due within the first two years. Obtain a certificate of approval for the establishment of the JV from the Municipal Commission of Commerce (MOC). Foreign investors may wish to engage a consulting company to represent their interests while establishing the JV, benefiting as well from their long standing relationships with local authorities and procedural know-how. The regulations state that Chinese joint venture partners cannot steal intellectual property and trade secrets from their foreign partners. The Chinese government prefers the enterprise be established as a Joint Venture with a local Chinese partner. have a Chinese joint venture partner which means that an EJV (equity joint venture) or cooperative joint venture (CJV) must be used [The term ‘foreign invested enterprise’ (FIEs) is used to refer collectively to all the varieties of foreign owned enterprises used for conducting business in the PRC].The government is Specifically, multinational firms seeking to conduct foreign direct investment (FDI) in China are often required to form legal business relationships with a domestic Chinese partner, typically in the form of international joint ventures (IJVs) that establish a new offshoot firm. Rules, regulations and access to the domestic market clearly favor this method. Readers should independently verify the accuracy and reliability of the information. Funding and support for international business, PRC Foreign Investment Industrial Guidance Catalogue, Canadian Trade Commissioner Service in China, when entering a certain industry requires a local partner according to the restrictions outlined in the. Over two thirds of these were foreign models manufactured by Chinese joint ventures. 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. Differently from WFOEs (Wholly Foreign-owned Entity) and Representative Offices, a joint venture involves at least one Chinese partner which can be either an individual or a corporate.. Against a general trend towards liberalisation, the revised Investment Catalogue imposes new and tighter restrictions on investment in regards to vehicle manufacturing and education. 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