• Guide
How to set up a cooperative joint venture in China?
( chinadaily.com.cn )
Updated: 2014-01-17

In a cooperative venture, parties involved may operate as separate legal entities and bear liabilities independently rather than as a single entity. A cooperative venture can be registered as a limited liability entity resembling an equity joint venture in operations, structure, and status as a national legal entity.

There is no minimum foreign contribution required to initiate a cooperative venture, allowing a foreign company to take part in an enterprise where they preferred to remain a minor shareholder. The contributions made by the investors are not required to be expressed in a monetary value and can include excluded in the equity joint venture process can be contributed such as labor, resources, and services. Profits in a cooperative venture are divided according to the cooperative venture contract rather than by investment share, allowing a more flexible schedule for return on investment where one investor provides cash while the other party's investment is primarily in kind.

Greater flexibility in structuring a cooperative venture is permissible to include structure of the organization, management, and assets. There is no term for unlimited terms in cooperative ventures, but no provisions for the term of the duration. The term of the cooperative venture contract may be renewed subject to consent of parties involved and approval from examination and approval authorities. The foreign investor is permitted to withdraw their registered capital or a portion thereof from the cooperative venture during the contract.

Because of unique privileges and added features offered to the foreign party in a cooperative venture, trade unions must represent employees.