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Sino-foreign joint ventures are referred to those cooperative enterprises which are set up by foreign companies,enterprises,and other economic organizations or individuals,altogether with Chinese companies,enterprises or other economic organizations in China according to the laws and regulations,that is to say,this kind of enterprises are those LLC which are jointly set up by two or above investors of different nationalities according to the<legal person <corporation law>and <Enterprise Legal Person Registration Regulations>,and all the profits or looses are shared,with risks born together.
Characteristics of Sino-foreign joint ventures:
The enterprise is invested and operated by the both sides of investors and the the risk is born in proportion to the the investment.The risks and looses is shared by both sides.The amount of investment is converted to the percentage of shares.The proportion of the foreign investor must not be less than 25%.
Within China,the legal person is referred to the one who obtain the qualification of legal person according to the laws and regulations.The legal person should comply with China's laws and regulations.
The nature is limited liability Company.The both sides should comply with the principle of equality and mutual-benefit.The business should be operated by both sides and the profits,looses and the risks should be born altogether in proportion to the amount of the capital invested.
The procedure of the establishment of the Sino-foreign joint ventures:
The regular process goes as follows:Initiation,negotiation,agreement-signing,approval,and registration.The initiation application should be put up by the Chinese part.And then then the both sides should sign the agreement on the basis of equality and mutual-benefit,and consensus after negotiation.After the approval authority receives the application document required,it shall decide whether approve the application or not.For the approved one,the certificate of approval should be issued.The applier should go to the local industrial and commercial department to handle the registration procedure and attain the business license.The date of getting the business license is the day of the establishment of the enterprise.
The advantage of the Sino-foreign joint ventures:
Resource sharing and Complementary advantages.The network of Chinese part and the established well-known brands could be made full use of so that the enterprise could enter the Chinese market smoothly.
Joint venture could help investors make the best of the geographic advantages of the Chinese part,and reduce the cost reasonably and legally so that the operating cost could be lowered enormously.
The enterprise could have the favor policy for foreign investor.
The management of the Sino-foreign joint ventures:
The board of directors should be established and it is the hightest authority.The chairperson of the board could be held by Chinese part or the foreign investor part.The enterprise should also have the administrative organization.The general manager could be employed by the chairman or be served by the chairman him or herself.The general manager is responsible for the regular management.The labor union should also be established.
The enterprise has the right to formulate the production and operation plan,and the right of Procurement autonomy.The goods could be exported.And for goods which is urgently needed or needed to imported,the goods should be mainly sold in domestic market.The principle of the distribution of the profits is : First,the reserve funds,the reward and welfare for workers and enterprise development funds should be drawn from the profits,and then the profits could be distributed according to in proportion to the amount of the capital invested by the both sides of the investors.