Investing in China
5/5
()
About this ebook
There are three main types of foreign-invested enterprises, namely, the equity joint venture (EJV), the cooperative joint venture (CJV) and the wholly-owned foreign enterprise (WOFE). Together, they are referred to as foreign-invested enterprises or FIEs.
Chong Loong Charles Chaw
Charles Chaw is the author of many business guidebooks and market research reports on China. His bestselling: "Manufacturing, Outsourcing and R&D in China" is the first rating guide on China's industrial parks across the country. Began in 2000, he has researched, consulted and promoted China's most established industrial parks. Today, his rating on hundreds of industrial parks set the benchmarks for the sector and made available in Bloomberg BMART, FactSet, Standard & Poor's Capital IQ and Thomson Reuters Research Bank. Under his leadership, the company has published hundreds of research reports covering more than 40 industries on China for over a decade. Charles also appears regularly as guest speaker in numerous business channels with BBC Asia, CNBC, Bloomberg TV, Phoenix TV (Chinese), Channel News Asia, Russia TV 24 and Al Jazeera etc. Leveraging on his extensive knowledge and experience on China's industrial parks development, he has produced a 5-episodes television documentary program titled: "Inside the World Largest Factory" in 2004, and another 6-episode: "Inside China Next Powerhouse" in 2007. Both programs were broadcast internationally in 4 languages. Charles had worked with Deutsche Morgan Grenfell's investment banking unit and Cargill Financial Services Asia, the proprietary trading arm of Cargill Group prior founded China Knowledge.
Read more from Chong Loong Charles Chaw
Overview of China's Economy Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Jiangxi Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Tianjin Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Hunan Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Chongqing Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Hubei Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Shaanxi Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Anhui Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Yunnan Rating: 0 out of 5 stars0 ratingsChengdu Business Guide Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Heilongjiang Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Jilin Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Beijing Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Guangdong Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Qinghai Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Jiangsu Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Shangdong Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Liaoning Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Guangxi Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Hebei Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Guizhou Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Fujian Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Henan Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Inner Mongolia Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Tibet Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Gansu Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Hainan Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Sichuan Rating: 0 out of 5 stars0 ratingsIndustrial Parks in Zhejiang Rating: 0 out of 5 stars0 ratings
Related to Investing in China
Related ebooks
International Trade and Capital Flows Rating: 0 out of 5 stars0 ratingsSummary of Darek Klonowski's Venture Capital Redefined Rating: 0 out of 5 stars0 ratingsSystemic Fragility in the Global Economy Rating: 0 out of 5 stars0 ratingsThe Dream: How I Learned the Risks and Rewards of Entrepreneurship and Made Millions Rating: 5 out of 5 stars5/5When God Lost an Election Rating: 5 out of 5 stars5/5No-Excuses Innovation: Strategies for Small- and Medium-Sized Mature Enterprises Rating: 0 out of 5 stars0 ratingsSolution Nation: One Nation is Disproportionately Responding to the World's Most Intractable Problems Rating: 0 out of 5 stars0 ratingsIpo Your Spac !: The Step-By-Step Guide to Finance Your Special Purpose Acquisition Company Rating: 5 out of 5 stars5/5Unlocking Commercial Financing for Clean Energy in East Asia Rating: 0 out of 5 stars0 ratingsEuropean Investment Bank Activity Report 2020: Crisis Solution Rating: 0 out of 5 stars0 ratingsA High-Tech Business Venture: Start-Up, Growth and Closure: My Preparation for the Business Venture Rating: 0 out of 5 stars0 ratingsSummary of The Third Wave: by Steve Case | Includes Analysis Rating: 0 out of 5 stars0 ratingsThe Secret Language of Financial Reports: The Back Stories That Can Enhance Your Investment Decisions Rating: 3 out of 5 stars3/5The Startup Funding Formula: How to Raise Money for Your Business from Bootstrapping to IPO: Startup, #2 Rating: 0 out of 5 stars0 ratingsEnduring Success: What We Can Learn from the History of Outstanding Corporations Rating: 0 out of 5 stars0 ratingsInfrastructure as an Asset Class: Investment Strategy, Sustainability, Project Finance and PPP Rating: 0 out of 5 stars0 ratingsThe Greatest Show on Earth: A Brief History of the Canton Fair Rating: 1 out of 5 stars1/5Private Equity Fund Investments: New Insights on Alignment of Interests, Governance, Returns and Forecasting Rating: 0 out of 5 stars0 ratingsCentral Bank Capitalism: Monetary Policy in Times of Crisis Rating: 0 out of 5 stars0 ratingsInstitutional Investment in Infrastructure in Emerging Markets and Developing Economies Rating: 0 out of 5 stars0 ratingsDollarlogic: A Six-Day Plan to Achieving Higher Investment Returns by Conquering Risk Rating: 0 out of 5 stars0 ratingsWinning the Global Game: A Strategy for Linking People and Profits Rating: 0 out of 5 stars0 ratingsThe Global Marketplace Rating: 0 out of 5 stars0 ratingsPerformance of Private Equity-Backed IPOs. Evidence from the UK after the financial crisis Rating: 0 out of 5 stars0 ratingsWildcats of Finance Rating: 0 out of 5 stars0 ratingsINSIGHTS OF AN AMERICAN INVESTMENT MANAGER IN HONG KONG Rating: 0 out of 5 stars0 ratingsThe Changing Role of Gold Within the Global Financial Archictecture Rating: 0 out of 5 stars0 ratingsPIPE Investments of Private Equity Funds: The temptation of public equity investments to private equity firms Rating: 0 out of 5 stars0 ratingsSolar PPA The Ultimate Step-By-Step Guide Rating: 0 out of 5 stars0 ratings
Finance & Money Management For You
Capitalism and Freedom Rating: 4 out of 5 stars4/5The Intelligent Investor, Rev. Ed: The Definitive Book on Value Investing Rating: 4 out of 5 stars4/5The Psychology of Money: Timeless lessons on wealth, greed, and happiness Rating: 5 out of 5 stars5/5The 7 Habits of Highly Effective People: 15th Anniversary Infographics Edition Rating: 5 out of 5 stars5/5The Richest Man in Babylon Rating: 4 out of 5 stars4/5The Total Money Makeover by Dave Ramsey: Summary and Analysis Rating: 4 out of 5 stars4/5Die With Zero: Getting All You Can from Your Money and Your Life Rating: 4 out of 5 stars4/5Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple Rating: 5 out of 5 stars5/5Principles: Life and Work Rating: 4 out of 5 stars4/5Financial Words You Should Know: Over 1,000 Essential Investment, Accounting, Real Estate, and Tax Words Rating: 4 out of 5 stars4/5The Great Reset: And the War for the World Rating: 4 out of 5 stars4/5The Great Awakening: Defeating the Globalists and Launching the Next Great Renaissance Rating: 4 out of 5 stars4/5The Tax and Legal Playbook: Game-Changing Solutions To Your Small Business Questions Rating: 3 out of 5 stars3/5Set for Life: An All-Out Approach to Early Financial Freedom Rating: 4 out of 5 stars4/5Good to Great: Why Some Companies Make the Leap...And Others Don't Rating: 4 out of 5 stars4/5Just Keep Buying: Proven ways to save money and build your wealth Rating: 5 out of 5 stars5/5Built to Last: Successful Habits of Visionary Companies Rating: 4 out of 5 stars4/5The Freedom Shortcut: How Anyone Can Generate True Passive Income Online, Escape the 9-5, and Live Anywhere Rating: 5 out of 5 stars5/5The Book on Advanced Tax Strategies: Cracking the Code for Savvy Real Estate Investors Rating: 4 out of 5 stars4/5Wealthology: The Science of Smashing Money Blocks Rating: 3 out of 5 stars3/5Strategy Skills: Techniques to Sharpen the Mind of the Strategist Rating: 4 out of 5 stars4/5Family Trusts: A Guide for Beneficiaries, Trustees, Trust Protectors, and Trust Creators Rating: 5 out of 5 stars5/5Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life Rating: 4 out of 5 stars4/5Your Money or Your Life: A Practical Guide to Managing and Improving Your Financial Life Rating: 4 out of 5 stars4/5
Reviews for Investing in China
1 rating0 reviews
Book preview
Investing in China - Chong Loong Charles Chaw
Investing in China
Published by:
China Knowledge Press Pte Ltd
119 Genting Lane, HB@119 Genting #06-03, Singapore 349570.
T.: +65 6235 8468 F.: +65 6235 2374
www.chinaknowledge.com
ISBN: 978-981-08-6159-9
at Smashwords
© China Knowledge Press Pte Ltd, 2010
Investment Guidelines
There are three main types of foreign-invested enterprises, namely, the equity joint venture (EJV), the cooperative joint venture (CJV) and the wholly-owned foreign enterprise (WOFE). Together, they are referred to as foreign-invested enterprises or FIEs.
In addition to the three common types, three other types of investment are also available to foreign investors. These are the foreign-invested holding company (FIHC), the foreign-invested joint stock company (FIJSC), and the build-operate-transfer (BOT). With the relaxation of laws and regulations in accordance with China’s WTO commitments, these three types of investment are becoming more popular.
Six Types of Foreign Investment Enterprises:
Equity Joint Ventures (EJVs)
Cooperative Joint Ventures (CJVs)
Wholly-owned Foreign Enterprises (WOFEs)
Foreign-invested Holding Companies (FIHCs)
Foreign-invested Joint Stock Companies (FIJSCs)
Build-operate-transfers (BOTs)
Equity Joint Ventures (EJVs)
Equity joint ventures (EJVs) are enterprises that are jointly established, invested in, and operated by foreign enterprises, either economic entities or individuals (foreign participants), within the territory of the PRC, with Chinese enterprises or other economic entities (Chinese participants), in accordance with the principles of equality and mutual benefit. They are subject to approval from the Chinese government.
EJVs are legal persons subject to Chinese law and may own assets, sue and be sued. The foreign and Chinese participants share the joint ventures’ profits and bear its risks and losses. Joint ventures take the form of a limited liability company, which means that the personal wealth and property of the shareholding partners are shielded from corporate loss.
The proportion of investment contributed by one or more foreign participant(s) as its share of the registered capital of a joint venture shall in general be no less than 25%.
Cooperative Joint Ventures (CJVs)
Cooperative joint ventures (CJVs) are also called contractual operative enterprises. When Chinese and foreign partners establish a cooperative enterprise, provisions on such items as investment or terms for cooperators, distribution of earnings or products, sharing of risks and losses, method of business management and ownership of property on the expiration of the contract term shall be prescribed in the cooperative enterprise’s contract in accordance with the provisions of Chinese law.
Convenience and flexibility are the defining characteristics of this type of investment. Therefore, it is easier for cooperative partners to reach an agreement. A cooperative enterprise that complies with the provisions of Chinese law for a legal person shall have the status of a Chinese legal person.
In other words, a CJV lacking the status of a legal person is also allowed and is legally equivalent to a partnership. However, such a venture does not enjoy limited liability protection. In practice, the majority of CJVs are set up as limited liability companies with legal person status.
The general practice is that investment and cooperation provided by foreign partners is in the form of cash, equipment and technology. On the part of the Chinese partners, investment and cooperation comes in the form of land-use rights, labor and related services.
Major Differences Between EJVs and CJVs
The most significant difference between an EJV and a CJV is the allocation of profits and liabilities. In an EJV, profits and liabilities are allocated based on the ratio of the capital contributions made by the partners. For example, if one party contributes 30% of the capital investment, that party will receive 30% of the total profits and will be required to take up 30% of the liabilities.
In contrast, CJVs allow for greater flexibility in the agreement between the joint venture parties. In a CJV, profit sharing is generally prescribed by the joint venture agreement between the parties. In practice, the foreign party generally receives a higher percentage of profit in the initial years of the CJV and the Chinese partner becomes the owner of the fixed assets of the CJV at no cost upon the termination of the joint venture.
Wholly-Owned Foreign Enterprises (WOFEs)
Wholly-owned foreign enterprises (WOFEs) are enterprises established within Chinese territory in accordance with the relevant Chinese laws using capital provided by foreign investors. This category does not include branches in China of foreign enterprises or other economic entities. A WOFE is a Chinese entity registered in the territory of China and is governed and protected by Chinese laws.
WOFEs are subject to the Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises. The law was approved by