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Annex II
Business environment for joint ventures in China
(a) Legal and institutional framework
8.
As the nature and organization of Sino-foreign joint ventures are very different from those of the Chinese enterprises, a new legal and institutional framework has had to be built up specifically to accommodate the joint ventures. Since 1979, a number of laws governing Sino-foreign joint ventures have been promulgated. Strictly speaking, joint ventures are of two types: equity joint ventures and contractual joint
ventures (2)
9.
; and the laws governing them are different.
The operation of equity joint ventures is mainly governed by the Law of the People's Republic of China on joint ventures using Chinese and foreign investment (the Joint Venture Law, promulgated on 8 July 1979) and Regulations for the implementation of the Law of the People's Republic of China on joint ventures using Chinese and foreign investment (promulgated on 20 September 1983). (A list of economic laws and regulations governing Sino-foreign joint ventures is given in Annex II).
10.
The Joint Venture Law extends legal protection to foreign investors. It also specifies the form which an equity joint venture takes. According to the Law, an
(2) Much confusion has arisen over the term 'joint
ventures'. Sometimes it refers only to equity joint ventures, and sometimes contractual joint ventures are also included. As these two types of firms face similar problems, both are covered in this paper.
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