JV is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access a new market, particularly emerging markets; to gain scale inefficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities.

There are two types of Joint Venture:

l Equity Joint Venture (EJV) is 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.

l Cooperative Joint Venture (CJV) 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.

Advantages of forming a Joint Venture:

l  Provide companies with the opportunity to gain new capacity and expertise

l  Allow companies to enter related businesses or new geographic markets or gain new technological knowledge

l  Access to greater resources, including specialized staff and technology

l  Sharing of risks with a venture partner

l  Joint ventures can be flexible. For example, a joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business' exposure.

l  In the era of divestiture and consolidation, JV’s offer a creative way for companies to exit from non-core businesses.

l  Companies can gradually separate a business from the rest of the organisation, and eventually, sell it to the other parent company. Roughly 80% of all joint ventures end in a sale by one partner to the other.

The Disadvantages of Joint Ventures:

l  The objectives of the venture are not 100 per cent clear and communicated to everyone involved.

l  There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners.

l  Different cultures and management styles result in poor integration and co-operation.

l  The partners don't provide enough leadership and support in the early stages.

l  Success in a joint venture depends on thorough research and analysis of the objectives.

What we do:

l  Agency service for JV registration in China efficiently

l  Apply for capital settlement of the account to the bank

l  Apply for the customs registration and inspection and quarantine

l  Give consulting advice about JVC agreement.

l  Apply for the invoice, monthly accounting report, annual audit and final settlement.

l  Legal advice about company additional share, alteration and merges and acquisitions in China.

l  Apply for the “Z” visa for WFOE oversea employees

l  Litigation service, ADR service.