Forming a joint venture in China can be a successful endeavor as long as each side’s goals, contributions and responsibilities are mutual and understood. In the mid-1990s, setting up a Sino-foreign joint venture was the only way for a foreigner to invest in China. The Chinese government promulgated the Wholly-Foreign Invested Enterprise (WFOE) Law in 1984, allowing foreigners to invest in China by setting up WFOEs in sectors that are not restricted or prohibited to foreign investment. Since then, the popularity of WFOEs gradually increased, from occupying merely 27 percent of total international investment in 1995 to 76.3 percent in 2009. Meanwhile, the popularity of JVs continued to diminish due to many failed JVs.
However, in the past year or so, we are seeing the return of China joint ventures, as foreign investors view teaming up with Chinese partners who have knowledge of local market contacts and conditions vital to gaining access to the Chinese market. At the same time, acquisition of technology motivates Chinese companies to enter into joint ventures with foreign investors.
This article covers all you need to know about a China Joint Venture, including:
For more information about China joint ventures, please contact Dezan Shira & Associates' China Joint Venture experts.
