Joint-venture is a challenging form of a company as it brings together several parties and thus several cultures also. Different parties may have different ideas about the cooperation and for the joint-venture to be successful the ideas must be clearly expressed and accepted or the risk of joint-venture failing becomes high.
If the joint-venture is partly owned by a foreign shareholder and partly by a Chinese shareholder, then usually the Chinese shareholder is in a stronger position as it has more local expertise and knowledge. This local expertise and knowledge should benefit the joint-venture, but often it has happened that one or both of the joint-venture parties try to benefit their own company, rather than the joint-venture.
We protect our client’s interests in joint-venture negotiations and also supervise the established company during its operations. We have bring the local knowledge and experience also to benefit the foreign-party’s side creating more equal position between the joint-venture parties.
Some key points about joint-ventures in China:
- Joint-venture agreement is mandatory by law. It should be also utilized because it is a useful document.
- Minority shareholder can prevent company from operating.
- A joint-venture has at least two parties but can have even more foreign and Chinese parties.
- If you are not located and experienced with the Chinese company law and pratices, you need somebody realiable to look after your interests.
- Not all disputes happen because of bad faith but because of misunderstandings and lack of documentation.