chinese joint venture law

The Foreign Investment Law[1] is a law of the People's Republic of China governing foreign direct investment in China. Expected implementing regulations especially by the State Council will hopefully still clarify at least some of the open questions. Over the past decades, they have provided legal safeguards for foreign firms and promoted foreign investment and cooperation in China. If you would like to learn how Lexology can drive your content marketing strategy forward, please email enquiries@lexology.com. It is incorporated in both Chinese (official) and in English (with equal validity), with limited liability. This historically significant new law will enter into effect on January 1, 2020. At the same time, the current Equity Joint Venture Law, Contractual Joint Venture Law and the Wholly Foreign Owned Enterprise Law are all abolished. A Q&A guide to joint ventures law in China. According to statistics of the Ministry of Commerce, in January 2019, approximately 4,650 foreign invested enterprises were newly established China-wide, out of which 21% as equity joint ventures and 79% as wholly foreign owned enterprises. Posted in Basics of China Business Law. In the middle of the 1990s, China started unifying the treatment of foreign and Chinese legal subjects and their investments. We also find evidence for the existence of three channels through which international technology transfer takes place. It contains principles on : Weather certain indirect investments, e.g. Questions? We draft all agreements in English and Chinese, including the main joint venture agreement, articles of incorporation for the joint venture company, service agreements, technical support agreements, intellectual property licensing agreements, import/export agreements, territorial restriction agreements, trade secret and non-disclosure agreements and many agreements related to the … The government establishes a service system for foreign investment, and provide foreign investors and foreign-funded enterprises with consultation and services in respect of laws and regulations, policies and measures, investment project information and other aspects. But they very likely will play a less important role in practice. • The government protects the intellectual property rights and trade secrets of foreign investors and foreign-funded enterprises, and encourages technology cooperation on the basis of free will and business rules. One of the key components of the reform from a practical perspective is the equal treatment of shareholders regarding the internal organization of companies. It is accompanied by a detailed drafting note. Market entry (negative list, equal treatment), National security review in case of sensible projects, Reporting obligations, violation of which can be fined up to 1 million RMB, All existing joint ventures have to be restructured on the basis of the. It replaces the Law of the People's Republic of China on Sino-Foreign Equity Joint Ventures, the Law of the People's Republic of China on Wholly Foreign-owned Enterprises and the Law of the People's Republic of China on Sino-Foreign Cooperative Joint Ventures. 1979, surpa note 5, at 177. • It defines "foreign investment" as the investment activity directly or indirectly conducted by a foreign natural person, enterprise or other organization, including establishing a foreign-funded enterprise in China; acquiring shares, equities, property shares or any other similar rights and interests of a local enterprise; making investment to initiate a new project independently or jointly with any other investor; and making investment in any other way stipulated by laws or regulations. H can be t taken for granted that no joint venture will be given other than the narrowest access to the domestic Chinese marlzet. Wang Chen, vice chairman of the NPC Standing Committee, said the Law shows China's will and determination to follow through with reform and opening up in a new historical context, and that "it is a full testament to China's determination and confidence in opening wider to the outside world and promoting foreign investment in the new era. This is an important consideration for any country … JV Formation in China China is an attractive and lucrative market to enter into, but many are not aware of the challenges and risks involved in entering the market. The Law of the PRC on Chinese-Foreign Joint Ventures (Adopted by the Second Session of the Fifth National People’s Congress on July 1, 1979 and Promulgated on and Effective as of July 8, 1979) Article 1. This error, however inadvertent, on Ross’s financial disclosure report has not been previously reported. From a high-level perspective, the Foreign Investment Law embodies China's resolve to continue to modernize its laws to reflect the changing global economy. negative list for foreign investment. The Law's key provisions are as follows:[1]. By Dan Harris on June 3, 2020. The competition law implications of any restrictive covenants included in the joint venture agreement should be considered and care should be taken to ensure that such restrictions are reasonable and likely to be enforceable. The law was adopted by the National People's Congress on March 15, 2019 and came into effect on January 1, 2020. Foreign companies operating in these sectors have to choose between investing through a joint venture and not investing at all. Keep a step ahead of your key competitors and benchmark against them. Introducing PRO ComplianceThe essential resource for in-house professionals. "[3], National Development and Reform Commission, Ministry of Commerce of the People's Republic of China, "Foreign Investment Law of the People's Republic of China", "La Chine adopte la loi sur les investissements étrangers", "EU Chamber says China's new foreign investment law is "surprisingly accommodating, https://en.wikipedia.org/w/index.php?title=Foreign_Investment_Law_of_the_People%27s_Republic_of_China&oldid=975742654, Articles needing additional categories from November 2019, Creative Commons Attribution-ShareAlike License, This page was last edited on 30 August 2020, at 05:01. However, China's strict commercial laws mean that joint ventures often have to be entered into despite the risks. Ekso Bionics Announces CFIUS Determination Regarding China Joint Venture RICHMOND, Calif., May 20, 2020 (GLOBE NEWSWIRE) -- Ekso Bionics … By Dan Harris on August 28, 2014. ", © Copyright 2006 - 2020 Law Business Research. Many joint ventures failed to endure, and as multinationals gained experience in China, and foreign investment restrictions loosened, multinationals found it easier in many sectors to start a business from scratch—or to acquire an existing one outright—than to negotiate, establish, and manage a joint venture … China started unifying the treatment of shareholders regarding the legal framework is adjusted,.! In Basics of China Business Law, one further important part of foreign... Enterprises established prior to the domestic Chinese marlzet usually set up to from! Very likely will play a less important role in practice January 1,,! The risks need to restructure accordingly choose between investing through a joint venture will. Certain indirect investments, e.g in these sectors have to choose between investing a! Become your target audience ’ s go-to resource for today ’ s resource. 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