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| Joint Venture Company Formation In Wuhantion |
Wuhan, the capital of Hubei province,is the most populous city in central China. In 2015 it has a population of 10.60 million residing in three distinct districts (Hankou, Hanyang, and Wuchang), commonly known as “The Three Towns of Wuhan”. The city is recognized as the political, economic, financial, cultural, educational, and transportation centre of central China.
While Wuhan has for decades been a traditional base for manufacturing, it has also become one of the areas promoting modern industrial change. Wuhan consists of three national development zones, four scientific and technologic development parks, over 350 research institutes, 1,656 hi-tech enterprises, numerous enterprise incubators and investments from 230 Fortune Global 500 firms – enabling the city to offer globally competitive strengths in most business fields. By combining traditional industries such as automobile manufacturing, the starting point of China's economic liberalization, with new hi-tech industries in places like the Optics Valley, Wuhan is positioning itself as one of the most progressive business cities in all of Asia.
For more information about Wuhan, please
visit https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/international-business/csg-china-research-report-on-investment-environment-of-wuhan-en-2013.pdf
For a long time, setting up a Joint Venture was the only option for foreign investors wishing to enter the Chinese market. A Joint Venture consists of a Chinese and a foreign investor.
In China two different kinds of Joint Ventures exist: Equity Joint Ventures (EJVs) and Cooperative Joint Ventures (CJVs).
An Equity Joint Venture is a company with limited liability. Parties of the Joint Venture may include one or several Chinese entities, and one or more foreign companies or individuals. In an Equity Joint Venture at least 25% of the shares have to be held by a foreign investor. It is a limited liability company and will be managed by a Board of Directors, whose members are foreign or Chinese.
A Cooperative Joint Venture can be found as a limited liability company but it is not necessary to set it up as a new legal entity, unless the cooperative contract stipulates otherwise. A cooperative Joint Venture (CJV) can be established in a format similar to a partnership where both parties incur unlimited liabilities. For CJVs there is no minimum capital required for foreign investors. Chinese and foreign investors can decide on the amount of capital injected by each investor and decide how to distribute profits. Investors may contribute other non-capital assets such as factories or land use rights.
When setting up a joint venture a business scope needs to be defined and stipulated in the Articles of Association. The business scope specifies the range of business activities in which the joint venture is allowed to engage and is subject to approval by administrative government offices as well as the state and local tax bureaus. Companies are only permitted to operate within the approved business scope. Specific and not general terms should be used to describe the business scope. Otherwise, it might not be accepted by the tax authorities.
Given the tax implications of different business scopes, it might seem to be tempting for some investors to state a business scope that is similar to the core business activities but not actually accurate. However, this is not advisable and cannot be recommended. Sooner or later government authorities are likely to discover the truth.
Setting up a Joint Venture requires the help of an expert. This is a brief overview of the most important steps:
1. Fill out the application form (sign the agreement);
2. Company name search & confirmation;
3. Pay for the services;
4. Submit the needed documents;
5. Check the documents;
6. Prepare for the statutory documents; Let the investors sign the documents personally, and then submit all the documents to the government
7. Keep clients informed of the processing.
8. Finish processing in 40-80 working days; (it depends on the registered address and business scope)
9. Hand over all the company kit to clients;
10. Sign the receipt.
Tommy China Business Consulting has direct connections in the local government. Since 2006, TCBC has been focusing on consulting services for our clients to invest in Wuhan China. Setting up a Joint Venture in Wuhan is a big project by itself, which requires financial and time commitments, business management knowledge and China expertise. Identifying a competent agent to manage the complex process will be a cost and time effective way to avoid potential pitfalls
Please visit http://www.tommyconsulting.com/CorporateFormation.html
Email: tomlee@tommyconsulting.com, Skype: tomleeli
WhatSapp/Wechat/Cell Phone: +86 18926401128
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