For the Service industry, it should be no less than USD 100,000, and the manufacturing industry is no less than USD 150,000. Although local partnerships are not needed for many sectors which are now open to foreign investment, China has a Negative List Approach against the previous Investment Catalogue, there are several reasons why a joint venture in China could still make sense. An EJV is a limited liability company where profits and losses are distributed by the ratio of capital contributions. Office relocation requires a tax clearance declaration report, essentially an audit of the company. Normally operation of a join… 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. 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. This amount is fixed in the articles of association of a JV, and constitutes an investment commitment (subject to any increase or decrease of registered capital approved by the government). Rules, regulations and access to the domestic market clearly favor this method. 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. 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. The lender was bidding for an extra 20% stake in its mainland business, J.P.Morgan Futures Co., a joint venture … Until now, foreign players could only own up to 49% in a Chinese fund management firm. I. 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. 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. 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. The LOI is a non-binding document and normally states the prerequisites and conditions of co-operation in the Chinese market. For Shanghai’s SAIC, 89 percent of the passenger cars it sold last year were from joint ventures with General Motors and Volkswagen. Take advantage of Canada’s free-trade agreements, foreign investment agreements, WTO agreements, and more. Where the financial and procedures of a joint venture are inconsistent with the provisions of the Tax Law, the tax liability shall be determined according to the provisions of the Tax Law. Establishing a joint venture in China A joint venture (JV) is a form of foreign invested enterprise (FIE) that is created through a partnership between foreign and Chinese investors, who together share the profits, losses and management of the JV. The incorporation process of a JV normally takes 5 to 6 months as it can be a complex corporate vehicle. For industries listed under “restricted” terms, foreign companies are still allowed to invest in China but must meet specific conditions such as limit equity ratio and remaining shareholding under 51%. 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. This article introduces how to establish a joint venture in China, including basic requirements, procedures, and timeline. JVs should apply for the name registration within 30 days upon receiving the approval of the project proposal. The investment of a Chinese partner in a joint venture may include the right to the use of a site provided for the joint venture during the period of its operation. After the announcement of new Foreign Investment Law, which is effective on January 1st, 2020, previous distinctions between the Equity Joint Venture (EJV) and Cooperative Joint Venture (CJV) have been abolished. The Chinese company often will try to convince the foreign company to enter into a complex “partnership” or joint venture that will “allow” the foreign company to participate in the product distribution business in China. The project proposal should contain the overall assumptions of the structure in which both sides will be stated as investors. When receiving the approval of the project proposal, a feasibility study shall be prepared by both parties. As an indispensable step before investment decisions and a basis for further work, it analyzes the viability of the idea and meanwhile it gives a reality check to the future cooperation between the two or more investors. 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