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Guangzhou Sino-foreign Cooperative Joint Venture Formation
Information provider:zanya consultants    Updated:2016/10/24    Website:www.companyformation86.com

Concept of Guangzhou Sino-foreign Cooperative Joint Venture


A Sino-Foreign Cooperative Joint Venture is a general applicable mode of economic co-operation of investors,the parties involved may operate as separate legal entities and bear liabilities independently rather than as a single entity. A cooperative venture can be established either as a limited liability company resembling an equity joint venture in operation, structure, and status as a Chinese legal entity or as a non-legal person, in which the partners are subject to unlimited liability and thus entirely liable for any losses.


Registered Capital


There is no minimum foreign contribution required to initiate a Cooperative Joint Venture, allowing a foreign company to take part in an enterprise where they preferred to remain a minor shareholder. The contributions made by the investors are not required to be expressed in a monetary value and can be contributed by labor, resources, and services which is excluded in the equity joint venture process


Guangzhou Joint Venture Contract and Profit Distribution


The rights and obligations of the JV partners concerning issues such as distribution, investment, operation and sharing of profits/losses and risks are determined by the joint venture contract rather than by investment share, allowing a more flexible schedule for return on investment in cases where one investor provides cash while the other party's investment is primarily in kind.


Commonly, in these contracts the Chinese party will own all the assets of the venture when it comes to the expire date of operation. While the foreign party will seek to recoup its investment within the lifetime of the venture. The foreign investor is permitted to withdraw their registered capital or a portion thereof from the cooperative venture during the duration of the cooperative venture contract. Because of the unique privileges and added features offered to the foreign party in a cooperative venture, trade unions must be allowed to represent the employees in employment matters to protect the interests of the employees.


Problems often arise with joint ventures concerning areas such as joint management, agreements on profit-sharing and technology transfer. Even though, JVs are still attractive for foreign investors who need a local partner with established connections and a distribution network, or who are looking for a partner with existing facilities and workers.


Advantages for Guangzhou Cooperative Venture


1.Diversified management structure, in adoption of the system of the Board of directors, the system of joint management committee, or the system of administration by mandate (i.e. to entrust other party than the Chinese and foreign partner to operate and manage)

2. Foreign investors are able to recover investment in priority

4. Foreign investors enjoy a various preferences

5. Flexible method of incorporation, as a legal entity or not

6. Shared resources, complementation of advantages 


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