What is a Joint Venture (JV)?
A joint venture (JV) is a form of foreign invested enterprise that is created through a partnership between foreign and Chinese investors. These investors share in the profits, losses, and management responsibility of the enterprise. A joint venture is usually sought by foreign investors looking to enter restricted industries such as education, entertainment, mining, hospital, etc. One of the major reasons for foreign investors to enter into a joint venture is that a local partner can offer specific benefits, such as well-established distribution channels, government relationships, or significant knowledge of the local market.
The Chinese partner is required to provide:
1. 2 copies of the Chinese and foreign investors’ IDs
2. 2 copies of the Chinese partner’s local business license (with company stamp)
3. 2 copies of the certified public accountant firm’s capital verification report (with the Chinese partner’s company stamp)
4. 2 copies of the Chinese partner’s audit report from the previous fiscal year (with company stamp)
5. Name list of the JV’s board directors
6. 2 copies of the Chinese partner’s local company article of association
The foreign partner is required to provide:
1. 2 certificate of incorporation, or equivalent document, certified by a Chinese embassy or Chinese consulate overseas*
2. 2 reference letters from investor’s bank to confirm good standing
3. Passport copy of the parent company’s director, the China company’s legal representative, and the Chinese company’s supervisor
4. 6 photos (2×2 inch) and resume of Chinese legal representative
5. Brief introduction of the foreign investor(s) including; name, address and telephone number
6. Registered capital
7. Business scope
8. 5 proposed Chinese names for the JV
9. Office address and 2 copies of the leasing contract
10. 2 copies of the certificate of real estate ownership
11. 2 copies of the landlord’s identification
12. Letter of authorization
Additional requirements for a trade-focused JV: A copy of the latest annual audit report from the parent company provided by a certified public accountant and customs HS codes of the proposed import/export products in China
*For individual investor: The passport copies of investors need be certified by a Chinese embassy or consulate. Double check with us if individual investor is currently in China.
The first step towards establishing a JV in China is to register the company name with the State Administration of Industry and Commerce (SAIC). Next, the company is required to obtain a joint venture certificate of approval from the Ministry of Commerce or Foreign Economical Cooperation Bureau (MOFEC). Once received, a business license application can be submitted to the SAIC before the Public Security Bureau (PSB) reviews the documentation and, if approved, issues the company with a chop. The next step is the approval of an organization code license from the Technical Supervision Bureau (TSB) and a tax certificate from the Taxation Bureau. From here, the JV must register with the State Administration of Foreign Exchange (SAFE). Once approved, the JV can open a foreign currency and RMB bank account and transfer the investor capital from an overseas bank account. This is required to apply for a capital verification report from a certified public accountant. Once the report is received, the JV must apply for a permanent business license from the SAIC before the final two steps; registering a financial certificate and a statistics license.