• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Joint Venture - What are the differences between a Chinese-foreign joint venture and a Chinese-foreign cooperative business operation?

Extracts from this document...


Joint venture A joint venture is similar in organization to a partnership. As with a partnership, each owner has unlimited liability in a joint venture, although management decisions are delegated to one individual. Unlike a partnership, a joint venture is set up for an undertaking of relatively short duration. An example would be where 15 or 20 people buy a carload of refrigerators and ship them to South America for sale. Once the enterprise is completed, the joint venture association is dissolved and each owner receives a share of t the capital plus or minus profits or losses. What is a Chinese-foreign joint venture? It is an undertaking finance through Chinese and foreign investment and jointly run by the participants. Established under the PRC law on Chinese-foreign Joint Ventures, it has the following distinctive features: 1. It is financed and run by the joint venturers who share the risks and profits. 2. Its shares are calculated in a single kind of currency in spite of the diverse forms of investment . The joint venturers share the responsibilities as well as the rights and interests commensurate with their respective contributions. ...read more.


One example is the China Schindler Elevator Co., a joint venture of the China National Construction Machinery Co. and the Schindler Elevator Co. of Switzerland, in which the Chinese have a 75 percent share. There are also cases where the two sides invest on a 50-50 basis, such as the Shenyang Gillete Commodity Co., a joint venture with Americans. Majority foreign shares are found in the China Nantong-Rikio Co. for which the Japanese have provided 60 percent of the investment, and also in the Jianghui Shipbuilding Engineering Co., in which British investment comes to 89.5 percent. The proportions of shares are worked out through negotiations and defined in the joint venture contract. The Chinese government encourages a majority foreign share in cases of a large investment, new technologies are brought in by the foreign participants, and the likelihood of increasing exports. What is the nature of the capital structure of a Chinese foreign joint venture? A joint venture if constituted as a limited liability company. Its assets consist of the shares contributed by the shareholders. Each investor is accountable for the liabilities of the venture only to the extent of his capital subscription. ...read more.


An equity joint venture and a contractual joint venture are different in three respects: For an equity joint venture, whatever the forms of investment, the equity ratio must be expressed in terms of money and the risks and profits are shared according to the ratio. For a contractual joint venture, the forms of investment and the method of profit-sharing are stipulated in the contract in such a way as may be agreed upon between the parties, and the shares need not be expressed in terms of money. For an equity joint ventrue, a managerial entity has to be established with a sound organization along the lines of the articles of association, and strict rules and regulations are worked out for joint operation. For a contractual joint venture, such a managerial entity may or may not be established. The parties can cooperate as separate legal entities and carry out their respective contract obligations to achieve the purposes set forth in the contract. As taxpayers, an equity joint venture pays according to the Income Tax Law Concerning Chinese-Foreign Joint Ventures, while foreign investors in a contractual joint venture pays according to the Income Tax Law Concerning Foreign Enterprises. S. 6 BUSINESS STUDIES NOTES JOINT VENTURE S.K.H. CHAN YOUNG SECONDARY SCHOOL PATRICK S. W. KWAN 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Case Studies and Analysis section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Case Studies and Analysis essays

  1. How Evans Enterprise party and wedding planners could use IT to help manage their ...

    The computers and laptops may not be utilised to their full potential as Elizabeth has not setup any type of online booking service for example, and this would be a great addition to their services. Elizabeth as an example does not know how to use programs such as Excel to

  2. Business plan. The business that I am going to produce is a personalised logo ...

    therefore I can build up the business in my hands, the way I see it to work, although having a partner will benefit me in many ways I think starting the 'PDW' as a sole trader is the best way forward. They have unlimited responsibility for all losses and debts.

  1. Business Ethics. Should Yahoo! Have provided information on Shi Tao to the Chinese government? ...

    The executive team at Yahoo may be on shaky moral ground, but legally they have done nothing more than be a good corporate citizen, no matter which country they operate in. Question 2 :- What were Yahoo's responsibilities in the situation ?

  2. PEST is a planning tool which is used by a business to evaluate and ...

    have the facilities to be able to work towards becoming healthier and fitter. This PEST factor will affect Ginsters as the government has been promoting healthy eating in recent years this means that Ginsters may be affected by this policy.

  1. I am going to carry out an investigation into S Parton Construction Ltd. I ...

    Wolverhampton (numbers) Wolverhampton (%) West Midlands (%) Great Britain (%) All people Economically inactive 36,100 26.0 22.7 21.4 Wanting a job 8,800 6.3 5.0 5.4 Not wanting a job 27,300 19.7 17.7 16.0 Males Economically inactive 12,700 17.8 17.3 16.6 Wanting a job 3,900 5.5 4.0 4.4 Not wanting a job 8,800 12.3 13.3 12.2 Females Economically

  2. International Business

    potential for market expansion within the region and these countries will be Qatar and the United Arab Emirates. These nations will be analysed to determine which of these is more suitable and appropriate for international expansion. 2.1 PEST Analysis for Two Countries To examine the most important areas of the

  1. Investigating Business Resources

    The role requires accuracy, efficiency and a high level of individual responsibility. Graduates can achieve rapid progress to more senior levels in the business. Tarmac promotes and encourages a culture of learning and development throughout the business through its Organisational Development team.

  2. Assignment 1 - Understand the legal requirements for a valid contract

    An acceptance is binding and the contract is said to be perfected when the acceptor places this acceptance in the mail box for return mail even if, in fact, it never reaches the offeror. The case at hand also corresponds to the case of Adams v Lindsell 1818 in which

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work