China Company Formation Service
Hotline: 86-755-82143348 Email: anitayao@citilinkia.com
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.
Reasons for setting up China JV
As a foreign investor, there are two major reasons to create a JV：
(1) when entering a certain industry requires a local partner according to the restrictions outlined in the PRC Foreign Investment Industrial Guidance Catalogue；
(2) when a local partner is able to offer tangible benefits such as well established distribution channels, government relationships or significant knowledge of the local market. As with any partnership, in addition to the advantages of working together, JVs also face serious challenges. It is strongly recommended that prior to choosing this form of investment vehicle you consult with the foreign partner of an existing JV in order to better understand the advantages and disadvantages of the JV structure.
China JV registration-Advantages of China Joint Venture
（1）The use of local partner’s existing workforce and facilities
（2）Existing channels for sales and distribution
（3）Use of a partner’s network to build good relationships; avoid red tape and other bureaucratic complexities
（4）Entry into industrial sectors which exclude wholly foreign-owned investment
China JV registration-Procedures for registering a Joint Venture
1. Pre-Licensing of China joint venture registration
A letter of intent or memorandum of understanding must be written and signed by all partners. Where the JV will be acquiring land or other fixed assets, or where the capital investment in the JV will be significant, pre-approval from the National Development and Reform Commission (“NDRC”) may be required. Certain other government ministries may need to be consulted and to provide approval where the JV is to do business in a relatively regulated industry (for example health or education) or where the collateral impact of the JV’s proposed business activities require review (for example pollution, heavy energy usage).
2. Licensing of China joint venture registration
Once the approval certificate has been received, investors must apply and register for a business license with the AIC. AIC requires most of the same documents as MOC, plus its own standard filing forms. Once a business license is issued, certain post-registration formalities must be completed including:
3. Internal Supervision of China joint venture registration
JVs are also required to appoint at least one individual (of any nationality and residency) as the supervisor of the JV. The supervisor’s primary role is to monitor the affairs of the JV and the directors of the JV, and to report any irregularities to the board of directors of the JV and to the investor(s) of the JV.
4. Regulatory Supervision of China joint venture registration
In addition to filling annual taxes, JVs must submit an annual audit report to the AIC.
5. Legal Liability of China joint venture registration
A JV is a limited liability company, where the liability of the JV’s investor(s) is generally limited to the assets of the JV.
6. Office Lease of China joint venture registration
Before beginning the application process investors must lease office space for their future business. It is recommended that a clause be added to the lease voiding the contract without penalty should the JV application be rejected. Office relocation requires a tax clearance declaration report, essentially an audit of the company.
Contact Us
If you have further queries, don’t hesitate to contact ATAHK anytime, anywhere by simply visiting ATAHK’s website www.3737580.net , or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to anitayao@citilinkia.com.