Joint venture in China

Registration of joint venture

One of the actual business models, which allows to conduct official business activities in PRC is a joint venture in China.

The fact that in China there are a number of restrictions for foreign firms. For example, companies with 100% foreign capital cannot conduct activities related to medical services, education, publishing, a number of industries may be closed or limited to foreign capital. Recently, even the market research industry is available only for joint ventures, foreign capital is not allowed in this area.

Therefore, the joint venture model does not lose its relevance.

2 types of joint ventures that we recommend to clients:

UGL Corporation offers a wide range of services to open and develop your business in China. Our specialists understand the intricacies of Chinese legislation, which allows you to officially register a joint venture in the shortest possible time.

In China, we distinguish between joint ventures and contractual arrangements.

The difference between the two forms of business is that a limited liability company is necessarily formed in a joint venture, and in case of contractual business conduct the company may be registered as a legal entity by agreement of the parties.

But, this is not all the difference: there is also a difference in responsibility of the participants, distribution of risks, profit, contribution of the authorized capital.

When conducting business on a contractual basis, each parties makes a profit, depending on the conditions clearly specified in the contract, and in joint ventures the distribution of profit depends on the share that each parties invested in the authorized capital. Thus, contractual enterprises are provided with more flexible conditions in matters of organization of structure and management; in return, they require serious work related to the preparation of documentation. Contractual enterprises are most often registered in the media sector for joint projects, for example, to create a full-length or animated film.

Legal features of a joint venture registration

The operation of the two types of joint ventures is regulated by the “Law on the company” and other regulatory acts relating to the corporate law section and special laws. Also, companies having the status of a legal entity include all regulatory acts that are valid in the territory of China.
An important point is that some areas are subject to restrictions on investing foreign capital, while the joint venture has more opportunities to operate in the Chinese market. For example, this form of investment allows for the production of medicines, chemicals, cars, educational centers and hospitals. All these activities become available only through a contractual or joint venture.

The main point that our experts pay attention to when registering the Joint Venture is a preliminary check of both parties of the JV (due diligence), as well as the preparation of the Charter and the agreement on the establishment of the enterprise, both of which are mandatory for registration and, according to our practice, require a lot of work coordination with both parties to the JV.

Registration of a joint venture of any of the above types is a more complicated procedure than the creation of an enterprise with 100% foreign capital. Therefore, we advise you to resort to this only in cases where it is impossible to be legally present in the PRC market, or because of reasons of economic profit.

Registration procedure with UGL Corporation

Our specialists carry out JV registration in China in 3 stages:

1. Receiving approval from the Ministry of Commerce authorities.

We thoroughly check the documents, their compliance with Chinese law.

2. Registration with the Commercial and Industrial Administration.

After passing this stage, we receive a license confirmation of the legitimacy of your company, as well as a document that allows you to officially conduct business.

3. Actions after receiving the registration certificate.

At the third stage, our experts will register your enterprise with various government agencies in China, and, if necessary, receive special licenses and permits for specific activities specified in the registration certificate of the joint venture.

At each stage, we strictly monitor all legal and organizational processes and provide regular reports to the client. Our company will help you choose a partner to create a joint venture, as well as carry out the necessary procedures to verify it. Together with us, your business will be reliably protected, and the registration of a joint venture will not take you much time.