ShenZhen Corporate Joint Venture

Shenzhen Company Formation Service
Hotline: 86-755-82143348, Email: amyhuang@citilinkia.com

Introduction of Joint Venture (JV)

1- EJV (Equity Joint Venture)

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. 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.

2- CJV (Cooperative Joint Venture)

In a Sino-Foreign Cooperative Venture (also known as Contractual Joint Venture), the parties involved may operate as separate legal entities and bear liabilities independently rather than as a single entity. A cooperative venture may also be registered as a limited liability entity resembling an equity joint venture in operation, structure, and status as a Chinese legal entity.

The principal differences between an EJV and a CJV can be simply summarized as follows:

- For an EJV:

Each party must make cash or permitted contributions in proportion to its subscribed percentage of the EJV's registered capital.

Profit must be distributed strictly in accordance with the parties' respective percentage shareholding of the registered capital of the EJV.

Upon dissolution of the EJV at the expiry of the term of operation, the EJV's net assets are to be distributed to each party in accordance with its respective shareholding of the EJV's registered capital.

- For a CJV:

A party (typically, but not always, the Chinese party) may contribute non-cash intangibles in the form of "cooperative conditions". 

Profit sharing in a CJV need not be made strictly in accordance with the parties' respective percentage shareholding of the registered capital of the CJV but can be made in accordance with the agreement of the parties 

Upon dissolution of the CJV at the expiry of the term of operation, the CJV's net assets may be transferred to the Chinese party without compensation (thus operating in many respects as a BOT project) so long as the foreign party has been able to recoup its capital contribution during the term of the CJV. 

Contact Us
For further queries, please do not hesitate to contact ATAHK at anytime, anywhere by simply calling China hotline at 86-755-82143348, or emailing to amyhuang@citilinkia.com.