Joint Venture

A Joint Venture is a corporate structure formed between a foreign firm and one or more local Chinese partner(s). Usually, a Joint Venture is established to combine and use the market knowledge, preferential treatment, and manufacturing capability of the Chinese side with the technology, manufacturing know-how, and marketing experience of the foreign partner(s).
Benefits and Disadvantages
Benefits:
Superior market access, local contacts, local knowledge.
Bringing first-class workforce and facilities.
Committed to the protection of the Joint Venture Company’s Intellectual Property Rights (IPR).
Disadvantages:
Lack of information about the prospective Chinese partner.
Need to retain comprehensive control.
Shared business profits.
Summary:
For many years Joint Venture was the second most common method of investing in China, and investment regulations were heavily weighted in favor of the local Chinese partners. Most recently, the investment environment has changed significantly and most foreign investments are now in the form of Wholly Foreign Owned Enterprises (WFOEs). However, for some companies, it’s still necessary or sensible to be set up as a Joint Venture.