Foreign investors interested in setting up a joint venture in China have support and assistance from our team of company formation agents in China. Even if the formalities are not that complex, it is still recommended to seek professional help, especially if you are doing business in China for the first time. In the following lines, you can familiarize yourself with the opening of a Chinese JV.
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What is a joint venture in China?
A joint venture in China is defined as a business arrangement between a company (or more) and an investor, which can have a fixed duration between 30 and 50 years or even unlimited if the government offers grants in this regard. There are two types of Chinese JV, with well-defined purposes. These are:
- Equity joint venture or EJV can operate as a limited liability company, where both profits and losses are distributed in proportion to each party’s equity interests, plus an investment of at least 25% equity interest in the equity joint venture’s registered capital from the foreign investor.
- Cooperative joint venture or CJV, the parties involved can work as separate legal entities, in the form of a limited liability company. The agreement of the Chinese JV must contain information about how profits and losses are distributed.
We recommend those interested in setting up a joint venture in China contact one of our local agents with confidence. They have the necessary experience and can take care of the paperwork involved in this process. We are here for those who want to set up a business in China.
Aspects related to the opening of a joint venture in China
Just like in the case of any legal entity, in the case of a Chinese JV, it is necessary to prepare some documents. However, there are other formalities to be observed, as follows:
- Preparation of the Articles of Association that set the rules for the optimal operation of the Chinese joint venture. They can also be considered constitutional documents.
- The rights and responsibilities must be found in the shareholder agreement, and this document is created when a joint venture is set up in China.
- The business license mentions the business scope of a JV in China. In this sense, the respective company will strictly operate the activities related to the business scope.
- Joint ventures in China are required to contribute the full amount of registered capital within a period of 30 years after registration.
Structure of a Chinese JV
A joint venture in China must have a board of shareholders, supervisors, and a board of directors, as stipulated in the Chinese Company Law Act. The board of stockholders has the greatest decision-making power. They can be represented by third parties, depending on their interests. What attributes do they have:
- Shareholders can name the board of directors of a joint venture in China.
- They can bring any amendments to the Articles of Association of the company.
- Major changes related to division, merger, or even liquidation come to the attention of shareholders, as a final decision.
We present some statistical data about companies registered in China:
- In 2020, around 43.3 million companies were registered in China.
- In 2021, approximately 48.4 million companies were registered in China.
- Data from 2019 showed that over 84% of companies were registered in the private sector in China.
So, if you want to set up a joint venture in China, you can contact our team of company formation agents in China. Our specialists can offer you support for the establishment of any type of company.