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

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S. 6 BUSINESS STUDIES NOTES                                                                         JOINT VENTURE

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.

  1. 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.
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  1. Since it is a limited liability company,  its liabilities are limited to its total assets.  The liabilities of each joint venturer  are limited to its share of registered capital, and nobody is accountable for the indebtedness of anybody else.

  1. It must be located within Chinese territory,  approved by the Chinese Government, and registered with the department in charge of industry and commerce before it acquires the status of a legal person,  and must pay taxes according to Chinese tax laws.

  1. It has full right to independent operation and the right to handle directly its ...

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