Also in the news...
From 1 January 2015 significant changes will be introduced in the EU VAT legislation for the provision of services in the areas of telecommunications, broadcasting and electronic services.
So you’ve made the marketing research, business plans are looking good, and so you’ve have decided that France will be your next big market
Launch your company or raise your performance in your targeted Asia Pacific market.
David Clive Price offers companies insider knowledge and strategies of how to optimize global business operations and build brand recognition in Asian markets
In 2014, the face of global enterprise continues to change rapidly. The signs are everywhere: This year, the fastest-growing economy is expected to be Mongolia’s, at a rate of 15.3 percent.
Business In China Explained: Joint Ventures
Joint Ventures are still seen as the most viable way of entering the Chinese market.
Although many companies are beginning to take a risk by establishing WFOEs, Joint Ventures are still seen as the most viable way of entering the Chinese market (alongside Representative Offices). Not only are Joint Ventures more likely to gain government approval, but they also bring the knowledge and experience of a local partner.
No one wants to relinquish any control over their company, but when you're dealing with the Chinese market, you make a big decision: set-up a WFOE and retain complete control, but with no essential local help; or set-up a Joint Venture, give up some control, but reap the benefits that a local partner can provide.
And that's why Joint Ventures are so popular: they exploit market knowledge, win preferential treatment and manufacturing capability, and acquire the general business know-how.
Joint Ventures are invariably granted on a fixed-term basis generally 30 50 years. Unlimited time-scales can often be approved too. As with most business, profits are distributed in accordance with equity invested.
Shareholdings are generally non-negotiable and cannot be moved with permission from the appropriate Chinese authorities. However, this is something which is expected to change over time.
Although there is no minimum prerequisite for investment by the local partner, the foreign partner must contribute a minimum of 25%. There are particular regulations on the management structure of Joint Ventures, but the position of chairman can be held by either the local or foreign partner.
Upon registration of a Joint Venture, it is then considered a legal Chinese entity. It must therefore abide all Chinese laws. A Joint Venture is free to employ indigenous workers, but must obviously adhere to the labour law. And unlike other forms of business, such as Representative Offices, Joint Ventures are also permitted to buy land and build offices.