The Chinese authorities encourage foreign investors to use Joint Venture.
A Joint Venture is a business arrangement in which the participants create a new business entity or official contractual relationship and share investment and operation expenses, management responsibilities, and profits and losses.The Chinese authorities encourage foreign investors to use this form of company in order to obtain exposure to advanced technology and new management skills. In return, foreign investors can enjoy low labour costs, low production costs and a potentially large Chinese market share. Joint Ventures are sometimes the only way to register in China if a certain business activity is still controlled by the government, for example restaurants, bars, building and construction, car production, cosmetics etc.
Procedures of the people’s republic of China for the registration and administration of Chinese-foreign Joint Ventures
(Promulgated by the State Council on and Effective as of July 26, 1980)Article 1.
In accordance with the provisions of the Law of the People's Republic of China on Chinese-Foreign Joint Ventures, these Procedures are formulated in order to carry out the registration and administration of Chinese-foreign joint ventures and to safeguard their lawful operations.
Article 2.
A Chinese-foreign joint venture that has been approved by the Foreign Investment Commission of the People's Republic of China shall, within one month after approval, register with the General Administration for Industry and Commerce of the People's Republic of China. The General Administration for Industry and Commerce of the People's Republic of China shall authorize the administrative bureaus for industry and commerce of the provinces, autonomous regions and municipalities directly under the central authority to handle registration procedures for Chinese-foreign joint ventures within the areas under their jurisdiction, and business license shall be issued after examination and approval by the General Administration for Industry and Commerce of the People's Republic of China.
Article 3.
A Chinese-foreign joint venture that applies for registration shall present the following documents: (1) The document of approval issued by the Foreign Investment Commission of the People's Republic of China; (2) Three copies each of the Chinese and foreign language texts of the joint venture agreement and contract signed by the parties to the joint venture and its articles of association; and (3) A copy of the business license or other documents issued by the competent department of the government of the country (or region) from which the foreign joint venturer(s) come.
Article 4.
When a Chinese-foreign joint venture applies for registration, it shall fill out three copies each of a registration form in Chinese and a foreign language. The main items of registration shall be: the name of the venture, the address, the scope of production and operation, the form of production and operation, the registered capital and the proportion to be provided by each party to the joint venture, the chairman and vice- chairman of the board of directors, the president and vice-presidents or the factory manager and deputy factory managers, the number and date of the document of approval, the total number of staff and workers and the number of staff and workers of foreign nationality.
Article 5.
From the date it is issued its business license, a Chinese-foreign joint venture shall be regarded as formally established, and its legitimate production and operation activities shall be protected by the laws of the People's Republic of China. Unregistered enterprises shall not be permitted to go into operation.
Article 6.
A Chinese-foreign joint venture shall, upon presenting its business license, open an account with the Bank of China or a bank approved by the Bank of China and register with the local tax authorities for the payment of taxes.
Article 7.
When a Chinese-foreign joint venture desires to move to a new site, change its line of production, increase, decrease of assign the registered capital or extend the contract period, it shall, within one month after approval by the Foreign Investment Commission of the People's Republic of China go through procedures for registering the changes with the administrative bureau for industry and commerce of the province, autonomous region or municipality directly under the central authority where it is located. When there are changes in other registered items, they shall be reported in writing at the end of the year to the administrative bureau for industry and commerce of the province, autonomous region or municipality directly under the central authority where the joint venture is located.
Article 8.
When a Chinese-foreign joint venture registers or modifies its registration, it shall pay a registration fee or a fee for modification of registration, the amount of which shall be stipulated by the General Administration for Industry and Commerce of the People's Republic of China.
Article 9.
A Chinese-foreign joint venture, upon the expiration of the contract period or upon termination of the contract before the date of expiration, shall go through procedures for nullifying its registration by presenting the document of approval, issued by the Foreign Investment Commission of the People's Republic of China, to the administrative bureau for industry and commerce of the province, autonomous region or municipalities directly under the central authority where it is located and, after examination and approval by the General Administration for Industry and Commerce of the People's Republic of China, hand in its business license for cancellation.
Article 10.
The General Administration for Industry and Commerce of the People's Republic of China and the administrative bureaus for industry and commerce of the provinces, autonomous regions and municipalities directly under the central authority have the right to supervise and inspect the Chinese-foreign joint ventures within the area under their jurisdiction. Violators of these Procedures shall be given a warning or a fine in accordance with the seriousness of each case.
Article 11.
These Procedures shall go into effect on the day they are promulgated. (The English translations are for reference only)
