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Invest in China (2): Choose Your Business Vehicle

Overview

For foreign investment in China, 2019 is an important turning point. The legislature published the "Foreign Investment Law" in March 2019. This new law will take effect on January 1, 2020.

Before it comes into force, there are mainly three forms of establishing enterprises for foreign investors investing in China: Sino-foreign equity joint venture enterprises (JV), wholly foreign-owned enterprises(WFOE) and Sino-foreign cooperative enterprises, which are regulated by three different and corresponding laws and regulations.

After the new law comes into force, there will be five years for the already established foreign-funded enterprises to make a transition. For example, the approval and filing of investment projects, industry licenses, and enterprise registrations shall be governed by the Company Lawand the Law of the Partnership Enterprise.

The Foreign-Invested Enterprise Model Before the New Law Comes Into Effect

Sino-foreign equity joint venture enterprises (JV)

Definition: Foreign companies, enterprises and other economic organizations or individuals, in accordance with the principle of equality and mutual benefit