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The three main forms of Foreign Direct Investment in china for absorbing foreign capital are Chinese-Foreign Equity Joint Ventures, China-Foreign Contractual Joint Ventures, Wholly Foreign-Owned Enterprise.
Chinese-Foreign Equity Joint Ventures
Chinese-Foreign Equity Joint Ventures anew also called as Share Company with Foreign Investment. They are enterprises jointly established within Chinese territory companies, enterprises, and other economic entities on the other side. An equity joint venture shall be invested and operated jointly by both foreign and Chinese investors, who shall share the profits and losses, as well as risks, in proportion to their respective shares in the registered capital. Chinese-Foreign Equity Joint Ventures are Limited Liability Company, and possess the status of Chinese legal person.
In such an enterprise, the proportion of the investment contributed by the foreign party shall in general not be less than 25% of the total. The partner could offer cash, or other kinds of things instead such as building, workshop, machinery, industrial property right, special technique, and field utilization right The profits and other legal interests that foreign investors have shared can be remit out or reinvest China.
Chinese-Foreign Contractual Joint Ventures
Chinese-Foreign Contractual Joint Ventures are enterprises jointly established within Chinese territories by foreign companies, enterprises, other economic entities of individuals and Chinese companies, enterprises or other economic entities, according to their cooperative conditions. The both parties to a contractual joint venture should prescribe in the contract their respective conditions, lights, obligations, incomes distribution, responsibilities for risks and debts, the company management and negotiations on the property transaction at the expiration.
When establishing China-Foreign Contractual Joint Ventures, the foreign party provides land, factory buildings, certain usable machines and facilities, and in some cases a certain amount of capital as well. Chinese-Foreign Contractual Joint Ventures may posses the status of conventional person or not.
Wholly Foreign-Owned Enterprise
Wholly Foreign-Owned Enterprise is invested entirely by foreign companies, enterprises, other economic entities or individuals within Chinese territory in accordance with the related Chinese laws. Wholly Foreign-Owned Enterprise usually takes the form of limited liability companies, and do not include the Chinese Branch of foreign company or other economic organization.
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