Setting Up A Joint Venture In China

Joint ventures are a commonly used company structure in China: many of the most well-known companies, such as McDonald's, Starbucks, and most recently the Chinese ride-sharing unicorn Didi Chuxing have all adopted a joint venture (JV) company structure in China.

For foreign investors, there are two distinct reasons that a company may choose to enter into a joint venture.

First, it allows foreign businesses to invest in an industry sector that is categorized as 'restricted' under China's Negative List.

Second, it can enable a foreign company to make use of the local know-how, sales channels, and distribution networks of a Chinese partner, which can assist with the initial operations as well as expansion of the company.