-
Annex I
Organization
and status
Rights and
obligations
Duration
Investment
Distribution
of profit
Equity joint venture
A corporation of limited | liability with the
status of legal entity.
Joint investment, joint
operation, mutual share of risks, profits and losses in proportion to the equity share of
each party.
Both Chinese and foreign
parties may use cash (Renminbi or foreign currency), buildings, machinery, equipment and other tangibles, right to use of a land site, industrial and intellectual property rights, know-how and other intangibles as their investment.
The residue amount of gross
income after deduction
of joint venture income tax, reserve fund, bonus and welfare fund, and
enterprise expansion fund is the net profit distributable to the Chinese and foreign parties.
Contractual joint venture
Different Forms of Foreign Investment in China
a) A business body with the status of a legal
entity or
b)Any other business form without the status of a legal entity, to which each party independently bears its own liability.
As provided for in the contracts entered
into by/between Chinese and foreign parties.
Maximum duration is 50 years.
Both Chinese and foreign parties may use cash
(Renminbi or foreign currency), buildings, machinery, equipment and other tangibles, right to use of land site, industrial and intellectual property rights, know-how and other intangibles as their investment. Investment by the Chinese party may include
natural resources and labour.
For joint ventures b)described above, the
investment by the Chinese and foreign parties may not take the form of equity capital.
he net profit of joint ventures
a) described above shall be distributed as that of an equity joint venture, while the profit of joint ventures b) described above, after deduction of operating expenses, shall be distributed to both Chinese and foreign parties in terms of products, income or profit.
Joint exploration of oil, gas and
other natural resources
A business form without the status of a
legal entity, to which each party independently bears its own liability.
As provided for in the contracts
entered into by/between Chinese and foreign parties.
Generally, at the 1st stages of
exploration, all the risks are borne by the foreign party; at the 2nd stage of development, investment is made by both parties; after production begins, the amount of revenues after deduction of expenses shall be distributed to :
a) the Chinese party, a fixed percentage
portion;
b) both Chinese and foreign parties the
amounts to compensate for their capital invested in exploration and development together with accrued interests;
c) the foreign party a certain portion
as a reward.
As provided for in the contracts entered
into by/between Chinese and foreign parties.
The Chinese party receives at a fixed
percentage a portion of products, income or profit. The residue shall be distributed to both Chinese and foreign parties to compensate for their investment together with accrued interest, and to the foreign party a certain portion as a reward.
Compensation trade
Each party to the contract
independently bears its own liability.
The foreign party sells
Chinese party equipment or technology on credit or by means of a loan. The Chinese party repays
the foreign party by instalment with the products to compensate for the purchase prices or the loan together with interest. The Chinese party may
purchase raw materials itself, or the foreign party make the purchase on commission.
As provided for in the
contracts entered into by/between Chinese and foreign parties.
Each party manages its
own investment.
Each party is entitled to its own profit and liable for its own loss.
Wholly foreign- owned enterprises
The enterprises which meet the conditions for being considered as a legal entity will be so considered.
Risks, profits and losses
borne entirely by the foreign investors.
As approved by the Chinese authorities.
The foreign investor
manages his own investment.
The foreign investor is
entitled to his own! profit and liable to his own loss.