Joint Venture Formation
Information provided:zanya consultants    Updated:2016-05-19

Concept of Sino-foreign Joint Venture


A Sino-foreign Joint Venture (JV) is an enterprise formed by foreign investors and Chinese investors within the territory of the People's Republic of China, on the principle of equality and subject to approval by the Chinese Government. Foreign investors include that foreign enterprises, companies and other economic organizations or individuals. Chinese investors include Chinese enterprises, companies, and other economic organizations. Both parties to the venture shall share the profits, risks and losses in proportion to their contributions to the registered capital. Sino-Foreign Joint Venture has two forms which are Equity Joint Venture (EJV) and Cooperative Joint Venture (CJV)


Important Note: Chinese individuals are not qualified to invest in the JV.


Advantages of register a Joint Venture (JV)


1 Chinese investors can obtain exposure to advanced technology and new management skills.

2. Foreign investors can enjoy low production costs, low labor costs, and a potentially large Chinese market share.

3. Joint ventures are also able to purchase land and build their own buildings, privileges prevented to representative offices.

4. Joint Ventures Formation is sometimes the only way for foreign investors to enter China market if a certain business activity is still controlled by the government. e.g. Building and Construction, Bars, Cosmetics, Car Production,etc.


Registered Capital and Paid-Up Capital


Registered capital is defined as the total amount of capital contributions subscribed to by the parties and registered with the Chinese authorities. The amount of registered capital needed depends on factors like industry, scope of business and location. Generally speaking, for manufacturing and trading enterprise, the registered capital is required RMB 1 million or above. For service enterprises, such as consultancy, technology, market research and development, the registered capital is usually required RMB 500, 000 or above. Once the business license is issued, 15% of the registered capital should be paid up during 3 months, with the balance being remitted within 2 years. A minimum of 25% of the capital must be contributed by the foreign partner(s). There is no minimum investment for the Chinese partner(s).All of the registered capital can be paid in one time or several times, fewer times, fewer capital verification fees are needed. The forms of register capital includes cash,equipment, machinery, and intangible property such as proprietary technology, trademarks and other industrial property rights. However the technology contributed as registered capital by a party generally should not exceed 20% of the total registered capital


Business Scope


Business scope is one of the most important issues in WFOE registration application, which ultimately appears on the business license. Any alteration to the business scope requires further application and approval. General business scope usually includes investment consulting, trade information consulting, international economic consulting, corporate management consulting, marketing and promotion consulting, science and technology, manufacturing, wholesaling, retailing, import and export, etc.


Joint Venture (JV) Formation procedure


1. Name Pre-registration with local State Administration for Industry and Commerce (SAIC)

2. Pre-approval from local government authorities concerned if business scope entails such pre-approval

3. Approval application from Fire and Environment Bureau for manufacturing industry

4. Certificate of Approval issued by Bureau of Foreign Trade and Economic Cooperation

5. Apply for Business License with local SAIC

6. Chops made by Public Security Bureau (PSB)

7. Organization Code License by local Bureau of Quality and Technical Supervision (BQTS)

8. State tax certificate registration

9. Local Tax certificate registration

10. Registration and Approval with State Administration of Foreign Exchange (SAFE)

11. Open Foreign Currency and RMB bank account

12. Financial certificate Registration with Ministry of Finance


Checklist for Clients


Documents provided by Foreign Partner:


1、3x original Certificate of Incorporations, Articles of Incorporation or Equivalent document notarized by local lawyer and endorsed by Chinese embassy or consulate. For individual investor: 2x original Passport copies of Investors need be notarized by local lawyer and endorsed by Chinese embassy or consulate.

2、2x original Bank Reference Letters from investor’s bank (declare a good standing)

3、2x original The latest annual audit report copy from the parent company provided by a Certified Public Accountant (CPA) (For the parent company established over one year)


Documents provided by Chinese partner:

1.  4x copies of Chinese partner's local company business license and other licenses

2.  3x copies CPA firm's capital verification report

3.  3x copies Chinese partners last year audit report (it is needed for one-year old company)

4.  3x copies of Chinese partner's local company's article of association


Documents provided by both Chinese Partner and Foreign Partner

1.  Office address in China, 2x original leasing contracts, 2x copies of house property certificate with company stamp or signature of lesser and 2x landlord identification documents (The lessee should be acted by legal representative or investor. The area is required no less than 30 ㎡ and for commercial use only with more than one year’s rent and the lease contract should be endorsed by local Housing Management Authority)

2.  Passport copy or ID card of: (i) JV company 's Legal Representative (ii) JV company 's supervisor (iii) JV company 's director and (iv) JV company 's manager

3.  JV company's Legal Representative provides: 6 photos (2 inches size),

4.  Registered capital; Business Scope; 6 proposed Chinese names of JV company


Our Services for You

1. Feasibility study report of Joint Venture
2. Articles of Association;
3. Certificate of Approval Joint Venture
4. Original Business License Certificate
4. Company stamp, financial stamp and l private stamp of legal representative;
6. Seal carving registration card;
7. Original Organization Code Certificate

8.  Original Digital Certificate of Organization Code
9.  Registration Certificate and form of State &Local Administration of Taxation;
10. Foreign Exchange Registration Certificate and approval certificate

11. License of Opening account;
12. Opening and canceling account confirmation;
14. Finance registration license and form.


All the certificates above include original one and duplicate one.

Processing Time for Guangzhou Joint Venture (JV)

1. For service enterprise: 40-60working days

2. For trading enterprise: 50-80 working days

3. For manufacturing enterprise: 50-70 working days (the time of approval papers application from the fire & environmental protection bureaus is not included)


Follow-Up Service of Joint Venture (JV)

1.  General tax payer application

2.  China Export Tax Refund Application

3.  Import and export license application

4.  Business license alteration

5.  Apply Capital Verification Report with Certified Public Accountant (CPA) (after Inject capital from investor’s overseas bank account).


ZANYA provides a series of business follow-up services such as, monthly bookkeeping and tax return, internal auditing, financial planning and tax layout, and China policy & market study. Other services include domain name registration, webpage design, website promotion, China trademark registration, Work Permit, Residence Permit, etc.


For further information or assistance, please feel free to contact us


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