Opportunities for foreign investors to integrate into the Chinese market have increased since the launch of the China Pilot Free Trade Zone, in September 2013. While there are five avenues to acquire a business in China, foreign investors most commonly use joint ventures and wholly foreign-owned enterprises.
Joint ventures
A joint venture is a business arrangement between a foreign partner and a Chinese partner with profits and losses being shared between the partners. The two most common types of joint ventures are the equity joint venture and the cooperative joint venture. Both types require the drafting of a detailed contract specifying the responsibilities, rights and interests of each partner. This usually involves a lengthy and complex negotiation between the partners.
Chinese partners typically bring their market knowledge, preferential market treatment and manufacturing capability to the venture, with the foreign partner contributing the technology, manufacturing know-how and marketing experience.
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Gautam Khurana is the managing partner at India Law Offices in New Delhi. Lenon Woo is the managing partner at Shanghai Promise Law Firm in Shanghai. The firms collaborate on legal matters arising out of investments and transactions involving Indian and Chinese companies.
D – 19 (GF) & D – 31, South Extension – 1
New Delhi – 110 049
Tel: +91 11 2462 2216, 2462218
Fax : +91 11 2465 4364
Email: g.khurana@indialawoffices.com
