Entering WTO meaning China's reform is entering a new phase. This 3 years in WTO, china's economy has occurred huge change: China's nationwide production total has increase 25%; foreign trade total has double in 3 years, break through USD 1 trillion, becoming the third biggest trading country just right after USA and Germany. China has become a place where all the foreign enterprises started to put their investments in China, every year, there was more than US 50 billions investment in China, in 2004, it even break through US 60 billions.
China attracts investments, usually is direct investment, and other investment methods. The most used methods are joint venture; wholly own foreign enterprise, and partnership investment.
1. Joint Ventures
Joint Venture companies also called stock joint venture companies. It is the combination between foreign companies and local Chinese companies. The characteristic for this kind of method is that together both side invest, operate the company together, and also share the risk of profit or loss. Each side will invest a certain %, usually the foreign company won't be lower than 25%.
This kind of method is one of the earliest methods that were being used by foreign companies and the most method used, and still is very influential.
2. Partnerships
For partnerships, also named contract joint venture companies. It's when foreign companies and Chinese companies have a set contract signed, and all the profit and rules are written clearly out on the contract. Usually, foreign companies will provide capital, when Chinese companies will provide land, factory, usable equipment, and with a certain amount of capital.
3.Wholly own foreign enterprise
Wholly own foreign enterprise means foreign companies, corporation, or other organization, or individual, based on China's policies and set up a company in China. This company must be beneficial to China, also need to match at least one of the following requirement, need to use the most modern international technology, products are mostly exporting, all foreign invested companies are limited companies.
4.Collaborate development
collaborate development means on sea or on land together doing the research and development. It is now the most used method for searching for nature resource, the biggest characteristics are high risk, high devotion, and high profit. Usually it's separate into three phrases, prospecting, development and production.
5.Foreign Investment Stock company
Foreign company, corporation, and other individual or organization, could hold together with a local Chinese company, individual or organization for a company, which has stock share. All the capital, responsible, and other assets are being giving to two sides by the ratio of market share. Within, foreign investor would have more than 25% of the stock share. Those company that is company limited now, could also apply and switch to stock company. Those who is qualify could also apply for emission stock on overseas market.
6 .New foreign investment methods
While keep increasing investment arena, trying to open up more with the Chinese market, China is also trying to discover and develop BOT, investment companies and other new methods on foreign investments. Whereas international cross country mergers has become the main direct investment method, now, China government is trying to figure out the corresponding policies, for foreign countries invest in China in a more convenient way.
In MCR's market admittance strategy service, based on the market environment, opportunity analysis, understand the local market stock chances; understand the local market's sales chances. Based on SWOT analysis, corporation with strength and local market's need will help the analysis for market admittance demand, then make sure what will be the final entering method (wholly own, joint venture, partnership, merger and acquisition, technology transfer, agency etc.), also combine with different factors, timeline and plans. |
