JOINT VENTURES

Business Formulation

What is a Joint Venture?

A Joint Venture (JV) in China is a form of a limited liability company (LLC) structure with a joined partnership between a foreign investor and one or more local Chinese partners. Many of the well-known companies, likeMcDonald’s, KFC or Starbucks have applied a JV company structure in China.
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The main advantage of JV structures is that the foreign partner can gain more accurate insights, leverage local talent and receive resourceful support from the local partner when doing business in China.

With the introduction of the new Foreign Investment Law (effective since January 1st 2020), the shareholder ratio, regulations as well as the organization formulation have been changed. Equity Joint Venture (EJV) and Cooperative Joint Venture (CJV) were replaced by new governed law. Existing joint ventures formed before the new Foreign Investment Law are entitled to 5 years of transition period to adopt and upgrade the structur ecompliance to the latest regulations.

Setting up a Joint Venture (JV)

Before moving forward with the incorporation process, it is vital to execute a due diligence on the intended JV partner.
Apart from choosing the right partner, there are several pre-considerations needed to be taken into account:

Incorporation process of Joint Ventures

There are many options in which a JV can form into a business. Proper JV structure and application process should seek professional advice to ensure a smooth application process to avoid unnecessary legal risks.