The choice of the right business structure for a foreign company to establish in China can be difficult and usually depends on the type of business contemplated. In some cases, the best form of business can be a joint venture with a Chinese partner capable of providing local manufacturing, regulatory compliance, government relations, market access and other valuable resources. WTG has helped to create joint ventures in China -- and has participated in several of those ventures.
Chinese law provides for different types of joint ventures between Chinese and foreign partners. Equity joint ventures are more formalistic and allow less latitude for the parties to shape their venture except in strict accordance wit their relative investments in the enterprise. These JVs normally are used where the capital investment is large and entails long-term manufacturing or in-country services to be funded and managed principally by the foreign partner.
Contractual or Cooperative joint ventures allow a more open structure which gives the parties more leeway in structuring and funding their enterprise. These JVs are better suited to many types of smaller operations involving services, product distribution within China and product sourcing which do not require extensive capital investment or long-term commitments for resources and labor.
Whichever form of JV is used, it is crucial to the success of the venture that:
♦ the strict registration and licensing process be followed closely,
♦ labor contracts be set up correctly,
♦ accounting and reporting requirements be complied with fully, and
♦ professional tax advice be obtained.
And above all it is essential that the foreign partner choose its Chinese partner wisely and to confirm that the JV's property interests, equipment and operations are legitimate and protected. WTG can handle those due diligence matters quickly and affordably.
For further information or assistance with new or existing joint venture operations in China please contact Jim Valenti at jvalenti@w-t-g.com
|
|
