Joint Ventures in China

Posted by RXW (470 days ago)

In advance, please excuse my lack of basic knowledge on this subject.
A Chinese friend of mine has a Chinese limited liability company here in Shanghai. She would like to go into partnership with a foreign group of companies and become the Chinese representative office for the group. To become part of the group she needs to sign a Joint Venture Agreement with them, which will basically tie the companies together legally, and will give the group a percentage of shares of the Chinese company. In return, the group will be able to supply services, support, know how, contacts, customers, etc. We believe it would be beneficial to all concerned. The question is, how can/should all this be dealt with in China? Is is possible to sign over shares to a foreign organisation? Do contracts have to be translated into Chinese and registered somewhere with authorities in China etc? Who should/can we turn to for advice?
Any advice on this matter would be very welcome indeed.

(I am based in Shanghai)

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Posted by douglaskoh (470 days ago)

A foreign organization can acquire shares of a local company. However, one will need to go through a similar process as those setting up JV company.

(I am based in Guangzhou)

Posted by RXW (470 days ago)

Thanks Douglas...I am not sure what you mean though. The Chinese company is already setup, so when you say "go through a similar process as those setting up JV company", what do you mean? The Chinese company has to be setup again? That sounds strange.

(I am based in Shanghai)

Posted by douglaskoh (470 days ago)

Yes. Indeed. Because JV companies are set up quite differently from local companies. Some of the laws and restrictions applies to JV companies only. Hence, you need to go through the procedure again.

(I am based in Guangzhou)