Sino-Foreign Cooperative Joint Venture
A Sino-Foreign Cooperative Joint Venture (CJV) is a joint venture between a Chinese and a foreign company within the territory of China. The Chinese company usually provides the labour, land use rights and factory buildings, while the foreign company brings in the necessary technology and key equipment, as well as the capital. This joint venture is based on a cooperative joint venture contract in which matters like the terms of cooperation, the division of earnings, the ownership of property upon the termination of the contract term of the CJV, the sharing of risks and losses, etc are laid down.
Differences between a Sino-Foreign Equity Joint Venture and a Sino-Foreign Cooperative Joint Venture
There are three main differences between an EJV and a CJV:
- While an EJV is always a legal person, and thus a limited liability company, a CJV can be a legal as well as a non-legal person. The latter option is not very common though because it would mean that the partners of the joint venture would be personally liable for any losses the company might make in the future
- In an EJV the distribution of profits has to take place equivalent to the ratio of the capital contributions made by the parties, while the distribution in a CJV can take place according to the parties' wishes. A CJV is thus a lot more flexible than an EJV.
- In a CJV a party may, besides contributing registered capital, provide for so-called cooperative conditions (Hence the name Cooperative Joint Venture), e.g. market access rights.
Establishing a Sino-Foreign Cooperative Joint Venture
Please refer to the heading of Establishing a Sino-Foreign Equity Joint Venture.