In the decade since the People's Republic of China (PRC) began opening its doors to foreign investment in the late 1970s, several vehicles have been developed through which foreign firms may invest in the PRC to undertake manufacturing or service projects. The first vehicle to be officially offered to foreigners as a means for investment was the "equity" joint venture (EJV), which was given its legislative basis in a brief 1979 statute, since supplemented by detailed implementing regulations and substantial other legislation. The EJV is a limited liability4 joint venture company formed by one or more Chinese enterprises with one or more foreign entities for a specified period of time,5 pursuant to a joint venture contract, articles of association and related documents. The parties make contributions in cash and/or in kind6 to the joint venture company's registered capital in an agreed upon ratio7 and share profits, losses and distributions upon dissolution in accordance with that ratio. 8 The joint venture company is treated as a "legal person" under Chinese law9 and pays taxes,10 signs contracts and undertakes other legal and economic activities in the name of the company and not in the names of the joint venture parties.
Gelatt, Timothy A.
"China's New Cooperative Joint Venture Law,"
Syracuse Journal of International Law and Commerce:
2, Article 3.
Available at: http://surface.syr.edu/jilc/vol15/iss2/3