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Investment Forms

Time:2009-10-10 01:20:13  Source:  Author:

Sino-Foreign Joint Ventures:

Sino-foreign joint ventures are limited partnership companies, and jointly invested in Chinese territory by foreign companies and Chinese partners. Liabilities of each partner of a joint venture are limited to the amount of capital it has invested. Partners may make their investment with money, buildings, machinery equipment, the right to use the workshop site, industrial properly, patent and know-how, calculated in a rate of capital contribution to the joint venture. The investment by foreign partners shall not be less than 25% of the total registered capital. Board of directors of the joint venture is the supreme organ of power.

 

Sino-Foreign Jointly Operated Enterprises: 

It is a contract type joint venture set up by and between foreign companies, enterprises and other economic entities or individuals and Chinese partners with joint investment and by providing cooperation conditions. The investment of foreign and Chinese partners, generally speaking, should not be converted to the capital contribution with the profit not distributed based on the ratio of their contribution. The rights, product share, risk and loss share, operation ways and assets ownership after termination shall be prescribed in the form of contract signed by the parties. The enterprise, generally, shall be fully or partially funded by foreign partners with cash, and the Chinese partners may provide land, factory buildings, equipment and facilities or a small amount of fund. As the foreign partners may in advance recover its investment and make profits during the term of cooperation, the total assets of the enterprise will go to the Chinese partner after the contract cooperation term expires.

 

Wholly Foreign-owned Enterprises: 

The enterprises are wholly foreign-owned, which means that foreign companies, enterprises, other economic entities or individuals establish 100% foreign-owned enterprises in China in accordance with Chinese Laws

 

Processing Trade:

Processing trade means an operation mode, i.e., all or partial bonded imported raw and accessory materials, parts, elements and apparatus, packing materials are manufactured to finished products for re-export through processing, manufacturing or assembly by enterprises in Chinese territory.
Processing trade includes processing with supplied materials and processing with imported materials. Processing with supplied materials refers to the imported materials are supplied by foreign partners, not paying foreign exchange for the import and not compensating with processing fees, but the finished products are sold by foreign partners and the enterprises earn the processing fees. Processing with imported materials refers to the imported materials are paid by the operated enterprises with foreign exchange and the finished products are exported by the operated enterprises.

 

BOT Forms:

BOT means Build-Operate-Transfer. The typical BOT form is that the Project Contract is signed by and between government and private-owner Project Company (as foreign investment form in China), then the Project is funded and constructed by the Project Company. During the contract period, the Project Company may own, operate and maintain this project and obtain reasonable profit from the use or service fee as it is collected. Upon the expiratory of contract, the ownership of the project built shall be transferred to the government. BOT form is mainly used for toll highways, power plants, railways, sewage facilities, urban subways and other infrastructure projects.

 

Foreign-Funded Financial Institutions:

Foreign-Funded Financial Institutions refer to the wholly foreign-owned financial institutions and Sino-foreign joint financial institutions and foreign financial institution's branches established in China with Chinese legal person status. Most of foreign financial institutions adopt the forms by setting up branches in China (such as bank branches, insurance company branches) without Chinese legal person status. The foreign institution in application for setting up branches in China shall possess the specified assets amount, under the strict financial control of the country where the headquarters of the financial institution is located, and is requested to establish agency in China for more than 2 years. The application for establishment of foreign funded institution shall be based on relevant laws and submitted to State financial authorities for approval.

 

Investment Company

The investment company refers to the company directly involved in the investment by means of wholly funded form or joint venture with Chinese partners. It is a limited liability company. The application for establishment of investment company shall accord with following terms and conditions: 1. The foreign investor's total assets shall not be less than USD 400 million at previous year before the application, and the investor has established enterprises in China with actual contributed register capital amounted to more than USD 10 million and more than 3 project proposals for investment to be approved, or the investor has set up more than 10 foreign funded enterprises engaged in production or infrastructure construction with its actual contributed register capital exceeding USD 30 million; 2. For the investment company established in joint venture form, the Chinese partner's total assets shall not be less than RMB 100 million; 3. The registered capital of the investment company shall not be less than USD 30 million.

 

Holdings Limited Company Invested by Foreign Investors:

It refers to that the company's total assets which consist of shares of equal value. The liabilities of shareholders are limited to the share amounts they have offered to buy, but the company shall bear liabilities with all assets of the company. The stock of the company shall be jointly held by Sino-foreign shareholders. Foreign shareholders may purchase and hold the shares more than 25% of the registered capital of a corporation.

 

International Lease:

It is a cooperation form that the lessor may lease machine, equipment and devices for a long term to the renter after the lease contract is signed, and the renter may use the rented equipment and devices for production and operation activity. During the lease period, the lessor has the rights of ownership to the leased devices, and the renter owns the use rights to the rented devices and shall pay lease fee to the lessor. Upon expiration of the lease contract, the rented devices can be disposed through the parties' agreement. The lease business mainly involves 2 ways, i.e. financial lease and lease for business operation.

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