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A joint venture (JV) is a business entity created by two or more parties, generally characterized by
shared ownership Equity sharing is another name for shared ownership or ''co-ownership (disambiguation), co-ownership''. It takes one property, more than one owner, and blends them to profit maximization, maximize profit and tax deductions. Typically, the parties fi ...
, shared returns and
risks In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environmen ...
, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access a new market, particularly
emerging market An emerging market (or an emerging country or an emerging economy) is a market that has some characteristics of a developed market, but does not fully meet its standards. This includes markets that may become developed markets in the future or were ...
s; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities. Work by Reuer and Leiblein challenged the claim that joint ventures minimize downside risk. According to Gerard Baynham of Water Street Partners, there has been much negative press about joint ventures, but objective data indicate that they may actually outperform wholly owned and controlled affiliates. He writes, "A different narrative emerged from our recent analysis of U.S. Department of Commerce (DOC) data, collected from more than 20,000 entities. According to the DOC data, foreign joint ventures of U.S. companies realized a 5.5 percent average return on assets (ROA), while those companies’ wholly owned and controlled affiliates (the vast majority of which are wholly owned) realized a slightly lower 5.2 percent ROA. The same story holds true for investments by foreign companies in the U.S., but the difference is more pronounced. U.S.-based joint ventures realized a 2.2 percent average ROA, while wholly owned and controlled affiliates in the U.S. only realized a 0.7 percent ROA." Most joint ventures are incorporated, although some, as in the
oil and gas industry The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of hydrocarbon exploration, exploration, extraction of petroleum, extraction, oil refinery, refining, Petroleum transport, transporting (often ...
, are "unincorporated" joint ventures that mimic a corporate entity. With individuals, when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture where the parties are "''co-venturers''". The venture can be a business JV (for example, Dow Corning), a project/asset JV intended to pursue one specific project only, or a JV aimed at defining standards or serving as an "industry utility" that provides a narrow set of services to industry participants. Some major joint ventures include
United Launch Alliance United Launch Alliance (ULA) is an American spacecraft launch service provider that manufactures and operates a number of rocket vehicles that are capable of launching spacecraft into orbits around Earth Earth is the third planet from th ...
,
Vevo Vevo ( , an abbreviation An abbreviation (from Latin Latin (, or , ) is a classical language belonging to the Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Throug ...

Vevo
,
Hulu Hulu () (stylized in all lowercase) is an American subscription video on demand service fully controlled and majority-owned by The Walt Disney Company, with Comcast's NBCUniversal as an Equity (finance), equity stakeholder. The service was init ...

Hulu
,
Penske Truck Leasing Penske Truck Leasing Co., L.P. is a joint venture A joint venture is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and economic risk, risks, and shared governance. Companies typical ...
, and
Owens-Corning Owens Corning is an American company that develops and produces insulation, roofing, and fiberglass composites and related materials and products. It is the world‘s largest manufacturer of fiberglass composites. It was formed in 1935 as a partne ...
.


Legal definition

In
European law European Union law is a system of rules operating within the member states of the European Union The European Union (EU) is a political and economic union of Member state of the European Union, member states that are located primarily ...
, the term "joint venture" is an exclusive legal concept, better defined under the rules of
company law Corporate law (also known as business law or enterprise law or sometimes company law) is the body of law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules t ...
. In
France France (), officially the French Republic (french: link=no, République française), is a transcontinental country This is a list of countries located on more than one continent A continent is one of several large landmasses ...
, the term "joint venture" is variously translated '' "association d'entreprises", "entreprise conjointe", "coentreprise" ''or'' "entreprise commune".''


Company incorporation

A JV can be brought about in the following major ways: * Foreign investor buying an interest in a local company * Local firm acquiring an interest in an existing foreign firm * Both the foreign and local entrepreneurs jointly forming a new enterprise * Together with public capital and/or bank debt In the UK,
India India, officially the Republic of India (Hindi Hindi (Devanagari: , हिंदी, ISO 15919, ISO: ), or more precisely Modern Standard Hindi (Devanagari: , ISO 15919, ISO: ), is an Indo-Aryan language spoken chiefly in Hindi Belt, ...
, and in many
common law In law, common law (also known as judicial precedent or judge-made law, or case law Case law is the collection of past legal decisions written by courts and similar tribunal A tribunal, generally, is any person or institution with authority ...
countries, a joint-venture (or else a company formed by a group of individuals) must file with the appropriate authority the
memorandum of association The memorandum of association of a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal person, legal or a mixture of both, with a specif ...
. It is a
statutory A statute is a formal written enactment of a legislative A legislature is an assembly Assembly may refer to: Organisations and meetings * Deliberative assembly A deliberative assembly is a gathering of members (of any kind of collective) ...

statutory
document which informs the outside public of its existence. It may be viewed by the public at the office in which it is filed. A sample can be seen at wikimedia.org. Together with the
articles of association In corporate governance Corporate governance is the collection of mechanisms, processes and relations used by various parties to control and to operate a corporation. Governance structures and principles identify the distribution of rights an ...
, it forms the "constitution" of a company in these countries. The articles of association regulate the interaction between shareholders and the directors of a company and can be a lengthy document of up to 700,000+ pages. It deals with the powers relegated by the stockholders to the directors and those withheld by them, requiring the passing of
ordinary resolutionIn Business law, business or commercial law in certain common law jurisdictions, an ordinary resolution is a Resolution (law), resolution passed by the stockholder, shareholders of a company (law), company by a majority, simple or bare majority (for ...
s,
special resolution{{refimprove, date=August 2011 In Business law, business or commercial law, an extraordinary resolution or special resolutionSome jurisdictions use both terms, but meaning slightly different things. For example, in the United Kingdom, an extraordina ...
s and the holding of Extraordinary General Meetings to bring the directors' decision to bear. A
Certificate of IncorporationA certificate of incorporation is a legal document/license relating to the formation of a company A company, abbreviated as co., is a Legal personality, legal entity representing an association of people, whether Natural person, natural, Legal pe ...

Certificate of Incorporation
or the
Articles of Incorporation Articles of incorporation, also referred to as the certificate of incorporation or the corporate charter, are a document or charter that establishes the existence of a corporation in the United States The United States of America (U.S.A. o ...
is a document required to form a corporation in the U.S. (in actuality, the state where it is incorporated) and in countries following the practice. In the US, the "constitution" is a single document. The Articles of Incorporation is again a regulation of the directors by the stock-holders in a company. By its formation, the JV becomes a new entity with the implication: * that it is officially separate from its Founders, who might otherwise be giant corporations, even amongst the emerging countries * the JV can contract in its own name, acquire rights (such as the right to buy new companies), and * it has a separate liability from that of its founders, except for invested capital * it can sue (and be sued) in courts in defense or its pursuance of its objectives. On the receipt of the Certificate of Incorporation, a company can commence its business.


Shareholders' agreement

This is a legal area and is fraught with difficulty as the laws of countries differ, particularly on the enforceability of "heads of" or shareholder agreements. For some legal reasons, it may be called a
Memorandum of Understanding A memorandum of understanding (MoU) is a type of agreement between two (bilateral Bilateral may refer to any concept including two sides, in particular: *Bilateria, bilateral animals *Bilateralism, the political and cultural relations between ...
. It is done in parallel with other activities in forming a JV. Though dealt with briefly for a
shareholders' agreement A shareholders' agreement (sometimes referred to in the U.S. as a stockholders' agreement) (SHA) is an agreement amongst the shareholder A shareholder (also known as stockholder) is an individual or institution (including a corporation) that legal ...
, some issues must be dealt with here as a preamble to the discussion that follows. There are also many issues which are not in the Articles when a company starts up or never ever present. Also, a JV may elect to stay as a JV alone in a "quasi partnership" to avoid any nonessential disclosure to the government or the public. Some of the issues in a shareholders' agreement are: * Valuation of intellectual rights, say, the valuations of the IPR of one partner and, say, the real estate of the other * The control of the company either by the number of directors or its "funding" * The number of directors and the rights of the founders to their appoint directors which shows as to whether a shareholder dominates or shares equality. * Management decisions – whether the board manages or a ''founder'' * Transferability of shares – assignment rights of the founders to other members of the company *
Dividend policy Dividend policy is concerned with financial policies regarding paying cash dividend A dividend is a distribution of profits by a corporation A corporation is an organization—usually a group of people or a company—authorized by the sta ...
– percentage of profits to be declared when there is profit * Winding up – the conditions, notice to members * Confidentiality of know-how and founders' agreement and penalties for disclosure *
First right of refusal Right of first refusal (ROFR or RFR) is a contractual right A concession or concession agreement is a grant of rights, land or property by a government, local authority, corporation, individual or other legal entity. Public services such as ...
– purchase rights and counter-bid by a founder. There are many features which have to be incorporated into the shareholders' agreement which is quite private to the parties as they start off. Normally, it requires no submission to any authority. The other basic document which must be articulated is the Articles, which is a published document and known to members. This repeats the shareholders agreement as to the number of directors each founder can appoint to the board of directors; whether the board controls or the founders; the taking of decisions by simple majority (50%+1) of those present or a 51% or 75% majority with all directors present (their alternates/
proxy Proxy may refer to: * Proxy or agent (law), a substitute authorized to act for another entity or a document which authorizes the agent so to act * Proxy (climate), a measured variable used to infer the value of a variable of interest in climate r ...
); the deployment of funds of the firm; extent of debt; the proportion of profit that can be declared as dividends; etc. Also significant is what will happen if the firm is dissolved, if one of the partners dies, or if the firm is sold. Often, the most successful JVs are those with 50:50 partnership with each party having the same number of directors but rotating control over the firm, or rights to appoint the Chairperson and Vice-chair of the company. Sometimes a party may give a separate trusted person to vote in its place
proxy vote Proxy voting is a form of voting Voting is a method for a group, such as a meeting or an , in order to make a collective or express an opinion usually following discussions, debates or . elect holders of high office by voting. Resident ...
of the Founder at board meetings. Recently, in a major case the
Indian Supreme Court The Supreme Court of India (IAST The International Alphabet of Sanskrit Transliteration (IAST) is a transliteration scheme that allows the lossless romanisation of Brahmic family, Indic scripts as employed by Sanskrit and related Indic lang ...

Indian Supreme Court
has held that Memorandums of Understanding (whose details are not in the articles of association) are "unconstitutional" giving more transparency to undertakings.


Dissolution

The JV is not a permanent structure. It can be dissolved when: * Aims of original venture met * Aims of original venture not met * Either or both parties develop new goals * Either or both parties no longer agree with joint venture aims * Time agreed for joint venture has expired * Legal or financial issues * Evolving market conditions mean that joint venture is no longer appropriate or relevant * One party acquires the other


Risks

Joint ventures are risky forms of
business partnerships
business partnerships
. Literature in business and management has paid attention to different factors of conflict and
opportunism Opportunism is the practice of taking advantage of circumstances – with little regard for principles or with what the consequences are for others. Opportunist actions are expedient actions guided primarily by self-interested motives. The term ...
in joint ventures, in particular the influence of parent control structure, ownership change, and volatile environment.


Joint ventures in different jurisdictions


China

According to a report of the United Nations Conference on Trade and Development 2003, China was the recipient of US$53.5 billion in direct foreign investment, making it the world's largest recipient of direct foreign investment for the first time, to exceed the USA. Also, it approved the establishment of nearly 500,000 foreign-investment enterprises. The US had 45,000 projects (by 2004) with an in-place investment of over 48 billion. Chinese requited Joint Ventures are a mechanism for forced technology transfer. In many cases, technology transfers are effectively required by China's
Foreign direct investment#REDIRECT Foreign direct investment A foreign direct investment (FDI) is an investment in the form of a Controlling interest, controlling ownership in a business in one country by an entity based in another country. It is thus distinguished fro ...
(FDI) regime, which closes off important sectors of the economy to foreign firms. In order to gain access to these sectors, China forces foreign firms to enter into Joint ventures with Chinese entities they do not have any connection with. Until recently, no guidelines existed on how foreign investment was to be handled due to the restrictive nature of China toward foreign investors. Following the death of
Mao Zedong Mao Zedong pronounced ; also Romanization of Chinese, romanised traditionally as Mao Tse-tung. (December 26, 1893 – September 9, 1976), also known as Chairman Mao, was a Chinese communist revolutionary who was the Proclamation of the ...

Mao Zedong
in 1976, initiatives in foreign trade began to be applied, and law applicable to foreign direct investment was made clear in 1979, while the first Sino-foreign equity venture took place in 2001. The corpus of the law has improved since then. Companies with foreign partners can carry out manufacturing and sales operations in China and can sell through their own sales network. Foreign-Sino companies have export rights which are not available to wholly Chinese companies, as China desires to import foreign technology by encouraging JVs and the latest technologies. Under Chinese law, foreign enterprises are divided into several basic categories. Of these, five will be described or mentioned here: three relate to industry and services and two as vehicles for foreign investment. Those five categories of Chinese foreign enterprises are: the Sino-Foreign Equity Joint Ventures (EJVs), Sino-Foreign Co-operative Joint Ventures (CJVs), Wholly Foreign-Owned Enterprises (WFOE), although they do not strictly belong to Joint Ventures, plus foreign investment companies limited by shares (FICLBS), and Investment Companies through Foreign Investors (ICFI). Each category is described below.


Equity joint ventures

The EJV Law is between a Chinese partner and a foreign company. It is incorporated in both Chinese (official) and in English (with equal validity), with limited liability. Prior to China's entry into WTO – and thus the WFOEs – EJVs predominated. In the EJV mode, the partners share profits, losses, and risk in equal proportion to their respective contributions to the venture's registered capital. These escalate upwardly in the same proportion as the increase in registered capital. The JV contract accompanied by the articles of association for the EJV are the two most fundamental legal documents of the project. The Articles mirror many of the provisions of the JV contract. In case of conflict the JV document has precedence. These documents are prepared at the same time as the feasibility report. There are also the ancillary documents (termed "offsets" in the US) covering know-how and trademarks and supply-of-equipment agreements. The minimum equity is prescribed for investment (truncated), where the foreign equity and debt levels are: * Less than US$3 million, equity must constitute 70% of the investment; * Between US$3 million and US$10 million, minimum equity must be US$2.1 million and at least 50% of the investment; * Between US$10 million and US$30 million, minimum equity must be US$5 million and at least 40% of the investment; * More than US$30 million, minimum equity must be US$12 million and at least 1/3 of the investment. There are also intermediary levels. The foreign investment in the total project must be at least 25%. No minimum investment is set for the Chinese partner. The timing of investments must be mentioned in the Agreement and failure to invest in the indicated time, draws a penalty.


Cooperative joint ventures

Co-operative Joint Ventures (CJVs) are permitted under the Sino-Foreign Co-operative Joint Ventures. Co-operative enterprises are also called Contractual Operative Enterprises. The CJVs may have a limited structure or unlimited – therefore, there are two versions. The limited-liability version is similar to the EJVs in status of permissions – the foreign investor provides the majority of funds and technology and the Chinese party provides land, buildings, equipment, etc. However, there are no minimum limits on the foreign partner which allows him to be a minority shareholder. The other format of the CJV is similar to a partnership where the parties jointly incur unlimited liability for the debts of the enterprise with no separate legal person being created. In both the cases, the status of the formed enterprise is that of a legal Chinese person which can hire labor directly as, for example, a Chinese national contactor. The minimum of the capital is registered at various levels of investment. Other differences from the EJV are to be noted: *A Co-operative JV does not have to be a legal entity. *The partners in a CJV are allowed to share profit on an agreed basis, ''not necessarily in proportion to capital contribution''. This proportion also determines the control and the risks of the enterprise in the same proportion. *It may be possible to operate in a CJV in a restricted area *A CJV could allow negotiated levels of management and financial control, as well as methods of recourse associated with equipment leases and service contracts. In an EJV management control is through allocation of Board seats. *During the term of the venture, the foreign participant can recover his investment, provided the contract prescribes that and all fixed assets will become the property of the Chinese participant on termination of the JV. *Foreign partners can often obtain the desired level of control by negotiating management, voting, and staffing rights into a CJV's articles; since control does not have to be allocated according to equity stakes. Convenience and flexibility are the characteristics of this type of investment. It is therefore easier to find co-operative partners and to reach an agreement. With changes in the law, it becomes possible to merge with a Chinese company for a quick start. A foreign investor does not need to set up a new corporation in China. Instead, the investor uses the Chinese partner's business license, under a contractual arrangement. Under the CJV, however, the land stays in the possession of the Chinese partner. There is another advantage: the percentage of the CJV owned by each partner can change throughout the JV's life, giving the option to the foreign investor, by holding higher equity, obtains a faster rate of return with the concurrent wish of the Chinese partner of a later larger role of maintaining long-term control. The parties in any of the ventures, EJV, CJV or WFOE prepare a
feasibility study #REDIRECT Feasibility study A feasibility study is an assessment of the practicality of a proposed project or system. A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed ve ...
outlined above. It is a non-binding document – the parties are still free to choose not to proceed with the project. The feasibility study must cover the fundamental technical and commercial aspects of the project, before the parties can proceed to formalize the necessary legal documentation. The study should contain details referred to earlier under Feasibility Study (submissions by the Chinese partner).


Wholly foreign-owned enterprises (WFOEs)

There is basic law of the PRC concerning enterprises with sole foreign investment controls, WFOEs. China's entry into the
World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization An intergovernmental organization (IGO) is an organization composed primarily of sovereign states (referred to as ''member states''), or of other organizations through ...
(WTO) around 2001 has had profound effects on foreign investment. Not being a JV, they are considered here only in comparison or contrast. To implement WTO commitments, China publishes from time to time updated versions of its "Catalogs Investments" (affecting ventures) prohibited, restricted. The WFOE is a Chinese legal person and has to obey all Chinese laws. As such, it is allowed to enter into contracts with appropriate government authorities to acquire land use rights, rent buildings, and receive utility services. In this it is more similar to a CJV than an EJV. WFOEs are expected by PRC to use the most modern technologies and to export at least 50% of their production, with all of the investment is to be wholly provided by the foreign investor and the enterprise is within his total control. WFOEs are typically limited liability enterprises (like with EJVs) but the liability of the directors, managers, advisers, and suppliers depends on the rules which govern the Departments or Ministries which control product liability, worker safety or environmental protection. An advantage the WFOE enjoys over its alternates is enhanced protection of its
know-how Know-how (or knowhow, or procedural knowledge) is a term for practical knowledge on how to accomplish something, as opposed to "know-what" (facts), "know-why" (science), or "know-who" (communication). It is also often referred to as street smarts ...
but a principal disadvantage is absence of an interested and influential Chinese party. As of the 3rd Quarter of 2004, WFOEs had replaced EJVs and CJVs as follows: (*)=Financial Vventures by EJVs/CJVs (**)=Approved JVs


Foreign investment companies limited by shares (FICLBS)

These enterprises are formed under the Sino-Foreign Investment Act. The capital is composed of value of stock in exchange for the value of the property given to the enterprise. The liability of the shareholders, including debt, is equal to the number of shares purchased by each partner. The registered capital of the company the share of the paid-in capital. The minimum amount of the registered capital of the company should be RMB 30 million. These companies can be listed on the only two PRC Stock Exchanges – the Shanghai and Shenzhen Stock Exchanges. Shares of two types are permitted on these Exchanges – Types "A" and Type "B" shares. Type A are only to be used by Chinese nationals and can be traded only in RMB. Type "B" shares are denominated in Renminbi but can be traded in foreign exchange and by Chinese nationals having foreign exchange. Further, State enterprises which have been approved for corporatization can trade in Hong Kong in "H" share and in NYSE exchanges. "A" shares are issued to and traded by Chinese nationals. They are issued and traded in Renminbi. "B" shares are denominated in Renminbi but are traded in foreign currency. From March 2001, in addition to foreign investors, Chinese nationals with foreign currency can also trade "B" shares.


Investment companies by foreign investors (ICFI)

Investment companies are those established in China by sole foreign-funded business or jointly with Chinese partners who engage in direct investment. It has to be incorporated as a company with limited liability. The total amount of the investor's assets during the year preceding the application to do business in China has to be no less than US$400 million within the territory of China. The paid-in capital contribution has to exceed $10 million. Furthermore, more than 3 project proposals of the investor's intended investment projects must have been approved. The shares subscribed and held by foreign Investment Companies by Foreign Investors (ICFI) should be 25%. The investment firm can be established as an EJV. On March 15, 2019, China's National People's Congress adopted a unified Foreign Investment Law, which comes into effect on January 1, 2020.


List of prominent joint ventures in China

* AMD-Chinese * Huawei-Symantec *
Shanghai Automotive Industry Corporation SAIC Motor Corporation Limited (SAIC, formerly Shanghai Automotive Industry Corporation) is a Chinese state-owned State ownership, also called government ownership and public ownership, is the ownership of an industry, asset In financial ac ...
(上海汽车集团股份有限公司), also known as SAIC (上汽) and SAIC-GM (上汽通用), is a Chinese state-owned automotive manufacturing company headquartered in Shanghaioperating in joint venture with US owned
General Motors General Motors Company (GM) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinat ...

General Motors
. Products produced by SAIC joint venture companies are sold under marques including
Baojun Baojun () is a Chinese automobile A car (or automobile) is a wheeled motor vehicle A motor vehicle, also known as motorized vehicle or automotive vehicle, is a self-propelled vehicle, commonly wheeled, that does not operate on Track (rai ...
,
Buick Buick () is a division of the American American(s) may refer to: * American, something of, from, or related to the United States of America, commonly known as the United States The United States of America (USA), commonly known as the U ...

Buick
,
Chevrolet Chevrolet ( ), colloquially referred to as Chevy and formally the Chevrolet Division of General Motors Company, is an American automobile division of the American manufacturer General Motors General Motors Company (GM) is an American Mul ...

Chevrolet
,
Iveco IVECO S.p.A., an acronym for Industrial Vehicles Corporation, is an Italian transport vehicle manufacturing company based in Turin, and a wholly owned subsidiary of CNH Industrial. It designs and builds light, medium, and heavy commercial vehicl ...

Iveco
, , and
Volkswagen Volkswagen (;English: , . shortened to VW ) is a German motor vehicle manufacturer headquartered in Wolfsburg Wolfsburg ( , , ) is the fifth largest city in the Germany, German state of Lower Saxony, located on the river Aller (Germany), ...

Volkswagen
** General Motors with SAIC Motor, formerly known as Shanghai General Motors Company Ltd., makes numerous cars in China in four factories, especially Buick, but also some Chevrolet and Cadillac models. In November 2018, the company announced new Chevrolet models for the Chinese market, including an extended-wheelbase Malibu XL, a new Chevy SUV concept, and a new Monza. **
Volkswagen Group China Volkswagen Group China (VGC) (大众汽车(中国)) is division of the German automotive concern Volkswagen Group Volkswagen AG (), known internationally as the Volkswagen Group, is a German multinational corporation, multinational Automo ...
- The numerous VW and Audi cars manufactured in China are made under two joint-venture partnerships: FAW-Volkswagen and
SAIC Volkswagen SAIC Volkswagen Automotive Co., Ltd., formerly known as Shanghai Volkswagen Automotive Co., Ltd. is an automobile manufacturing company headquartered in Anting, Shanghai, China and a joint venture A joint venture is a business entity created b ...
. * Beijing Benz Automotive Co., Ltd is a joint venture between BAIC Motor and
Daimler AG Daimler AG (; previously named Daimler-Benz and DaimlerChrysler; commonly known and referred to as Mercedes-Benz or simply Daimler) is a German multinational Multinational may refer to: * Multinational corporation, a corporate organization op ...

Daimler AG
. As of November 22, 2018, a full two million Mercedes-Benz vehicles had been built in China by this alliance. *
Dongfeng Motor Corporation Dongfeng Motor Corporation is a Chinese state-owned automobile manufacturer headquartered in Wuhan, Hubei, China. Traditionally one of the "Big Four" Chinese automakers, Dongfeng is currently in the top four in terms of output along with Changan ...
(东风汽车公司, abbreviated to 东风) is a Chinese state-owned automobile manufacturer headquartered in
Wuhan Wuhan (, ; ; ) is the capital of Hubei Province Hubei (; ; Postal romanization, alternately Hupeh) is a landlocked provinces of China, province of the China, People's Republic of China, and is part of the Central China region. The name ...

Wuhan
. The company was the second-largest Chinese vehicle maker in 2017, by production volume, manufacturing over 4.1 million vehicles that year. Its own brands are Dongfeng,
Venucia Venucia is a car marque of Dongfeng Nissan Passenger Vehicle Company (Dongfeng Nissan), a subsidiary of Dongfeng Motor Co., Ltd.. The marque was launched in September 2010 by Dongfeng Nissan. From February 2017 until the end of 2020, Venucia wa ...
, and Dongfen Fengshen. Joint ventures include
Cummins Cummins Inc. is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational state, a ...

Cummins
, Dana,
Honda is a Japanese Public company, public multinational corporation, multinational Conglomerate (company), conglomerate manufacturer of automobiles, motorcycles, and power equipment, headquartered in Minato, Tokyo, Japan. Honda has been the worl ...

Honda
,
Nissan (trading as A trade name, trading name, or business name is a pseudonym A pseudonym () or alias () (originally: ψευδώνυμος in Greek) is a fictitious name that a person or group assumes for a particular purpose, which differs from ...

Nissan
,
Infiniti is the luxury vehicle division of Japanese automaker Nissan. Infiniti officially started selling vehicles on November 8, 1989, in North America. The marketing network for Infiniti-branded vehicles included dealers in over 50 countries in the 2 ...

Infiniti
,
PSA Peugeot Citroën The PSA Group (), legally known as Peugeot S.A. (Peugeot Société Anonyme, trading as Groupe PSA; formerly known as PSA Peugeot Citroën from 1991 to 2016), was a French multinational Multinational may refer to: * Multinational corporation, a ...
,
Renault Groupe Renault ( , , , also known as the Renault Group in English; legally Renault S.A.) is a French multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinati ...

Renault
,
Kia Kia Corporation, commonly known as Kia (, ; formerly known as Kyungsung Precision Industry and Kia Motors Corporation, and stylized as KIΛ) is a South Korean multinational Multinational may refer to: * Multinational corporation, a corporate or ...
, and
Yulon Yulon Motor Co., Ltd. () is a Taiwanese automaker and importer. Taiwan's biggest automaker as of 2010, Yulon is known for building Nissan ( Nissan Motor Corporation and often shortened to Nissan) is a Japanese headquartered in , Japan. Th ...
.
FAW Group FAW Group Corporation ("First Automobile Works") is a Chinese state-owned State ownership, also called government ownership and public ownership, is the ownership of an industry Industry may refer to: Economics * Industry (economics) In ...
Corporation (第一汽车集团, abbreviated to 一汽) is a Chinese state-owned automotive manufacturing company headquartered in
Changchun Changchun (, ; ), Chinese postal romanization, also romanized as Ch'angch'un is the capital and largest city of Jilin, Jilin Province, China, People's Republic of China. Lying in the center of the Songliao Plain, Changchun is administered as a , ...

Changchun
. In 2017, the company ranked third in terms of output making 3.3 million vehicles. FAW sells products under at least ten different brands including its own and Besturn/Bēnténg, Dario, Haima, Hongqi,
Jiaxing Jiaxing (), alternately romanized as Kashing or Kiahsing, is a prefecture-level city A road sign shows distance to the "Huangshi urban area" () rather than simply " Yangxin County from the neighboring Xianning), but still from the Huangshi m ...
, Jie Fang,
Jilin Jilin (; alternately romanized as Kirin or Chilin) is one of the three provinces A province is almost always an administrative division Administrative division, administrative unitArticle 3(1). , country subdivision, administrat ...
, Oley, Jie Fang and Yuan Zheng, and Tianjin Xiali. FAW joint ventures sell
Audi Audi AG () is a Germany, German automobile manufacturer that designs, engineers, produces, markets and distributes luxury vehicles. Audi is a wholly owned subsidiary of the Volkswagen Group and has its roots at Ingolstadt, Bavaria, Germany. Aud ...

Audi
,
General Motors General Motors Company (GM) is an American multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinat ...

General Motors
,
Mazda is a Japanese multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational state, a sovereign ...

Mazda
,
Toyota is a Japanese multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational state, a sovereign st ...

Toyota
and
Volkswagen Volkswagen (;English: , . shortened to VW ) is a German motor vehicle manufacturer headquartered in Wolfsburg Wolfsburg ( , , ) is the fifth largest city in the Germany, German state of Lower Saxony, located on the river Aller (Germany), ...

Volkswagen
. * GAC (Guangzhou Automobile Group), is a Chinese state-owned automobile manufacturer headquartered in Guangzhou. They were the sixth biggest manufacturer in 2017, manufacturing over 2 million vehicles in 2017. GAC sells passenger cars under the Trumpchi brand. In China, they are more known for their foreign joint-venture with Fiat, Honda, Isuzu, Mitsubishi, and Toyota. *
Chang'an Automobile Group Chang'an Automobile (Group) Co., Ltd. is a Chinese Government-owned corporation, state-owned automobile manufacturer headquartered in Chongqing, China.Chongqing Chongqing ( ; ; Sichuanese pronunciation: , Standard Mandarin Standard Chinese (), in linguistics known as Standard Northern Mandarin, Standard Beijing Mandarin or simply Mandarin, is a dialect of Mandarin that emerged as the lingu ...

Chongqing
, and is a state-owned enterprise. In 2017, the company ranked fourth in terms of output making 2.8 million vehicles in 2017. Changan designs, develops, manufactures and sells passenger cars sold under the Changan brand and commercial vehicles sold under the Chana brand. Foreign joint venture companies include
Suzuki is a Japanese multinational corporation A multinational company (MNC) is a corporate A corporation is an organization—usually a group of people or a company A company, abbreviated as co., is a Legal personality, legal entity re ...

Suzuki
,
Ford Ford commonly refers to: * Ford Motor Company The Ford Motor Company, commonly known as Ford, is an American multinational automaker that has its main headquarters in Dearborn, Michigan, a suburb of Detroit (strait) , nicknames ...
,
Mazda is a Japanese multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational state, a sovereign ...

Mazda
and
PSA Peugeot Citroën The PSA Group (), legally known as Peugeot S.A. (Peugeot Société Anonyme, trading as Groupe PSA; formerly known as PSA Peugeot Citroën from 1991 to 2016), was a French multinational Multinational may refer to: * Multinational corporation, a ...
. *
Chery Chery Automobile Co. Ltd., trading as A trade name, trading name, or business name is a pseudonym A pseudonym () or alias () (originally: ψευδώνυμος in Greek) is a fictitious name that a person or group assumes for a particular pu ...

Chery
, a Chinese state-owned automobile manufacturer based in Anhui. They were the tenth biggest manufacturer in 2017. They have a foreign joint venture with Jaguar Land Rover for the production of
Jaguar The jaguar (''Panthera onca'') is a large felidae, cat species and the only extant taxon, living member of the genus ''Panthera'' native to the Americas. With a body length of up to and a weight of up to , it is the largest cat species in t ...
and
Land Rover Land Rover is a British brand of predominantly four-wheel drive Four-wheel drive, also called 4x4 ("four by four") or 4WD, refers to a two-axled vehicle drivetrain The drivetrain, also frequently spelled as drive train, or sometimes ...

Land Rover
cars in China. *
Brilliance Auto Huachen Automotive Group Holdings Co. Ltd., known for its brand name Brilliance Auto Group, is a Chinese automobile manufacturer headquartered in Shenyang. Its products include automobiles, microvans, and automotive components. Its principal activ ...
, is a Chinese state-owned automobile manufacturer based in Shenyang. They were the ninth biggest manufacturer in 2017. They have a foreign joint venture with BMW and also sells passenger vehicles under their own brand Brilliance and are expected to make 520,000 cars in China during 2019. * Honda Motor Co has a joint venture with Guangzhou Automobile Group (GAC Group) * Greely-Volvo,
Geely Zhejiang Geely Holding Group Co., Ltd (ZGH), commonly known as Geely, is a Chinese multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military ...
, is the biggest privately owned automobile manufacturer and seventh biggest manufacturer overall in China. Their flagship brand Geely Auto became the top Chinese car brand in 2017. Currently one of the fastest growing automotive groups in the world, Geely is known for their ownership of Swedish luxury car brand,
Volvo The Volvo Group ( sv, Volvokoncernen; legally Aktiebolaget Volvo, shortened to AB Volvo, stylized as VOLVO) is a Swedish multinational manufacturing corporation headquartered in Gothenburg Gothenburg (; abbreviated Gbg; sv, Göteborg ) ...
. In China, their passenger car brands include Geely Auto,
Volvo Cars Volvo Cars ( sv, Volvo personvagnar; stylized as VOLVO) is a Swedish Swedish or ' may refer to: * Anything from or related to Sweden, a country in Northern Europe * Swedish language, a North Germanic language spoken primarily in Sweden and Finl ...
, and
Lynk & CoLynk & Co is a China, Chinese-Sweden, Swedish Automotive industry, automobile brand owned by Geely, Geely Automobile Holdings. Founded in Gothenburg, Sweden in 2016, its cars will be positioned between those of the Geely brand and Swedish brand Volvo ...
. The entire
Volvo The Volvo Group ( sv, Volvokoncernen; legally Aktiebolaget Volvo, shortened to AB Volvo, stylized as VOLVO) is a Swedish multinational manufacturing corporation headquartered in Gothenburg Gothenburg (; abbreviated Gbg; sv, Göteborg ) ...

Volvo
Cars company has been owned by the Chinese company Geely since 2010 and manufactures most of the XC60 vehicles in China for export.


India

JV companies are the preferred form of corporate investment but there are no separate laws for joint ventures. Companies which are incorporated in India are treated on par as domestic companies. * The above two parties subscribe to the shares of the JV company in agreed proportion, in cash, and start a new business. * Two parties, (individuals or companies), incorporate a company in India. Business of one party is transferred to the company and as consideration for such transfer, shares are issued by the company and subscribed by that party. The other party subscribes for the shares in cash. * Promoter shareholder of an existing Indian company and a third party, who/which may be individual/company, one of them non-resident or both residents, collaborate to jointly carry on the business of that company and its shares are taken by the said third party through payment in cash. Private companies (only about $2500 is the lower limit of capital, no upper limit) are allowed in India together with and public companies, limited or not, likewise with partnerships. sole proprietorship too are allowed. However, the latter are reserved for NRIs. Through capital market operations, foreign companies can transact on the two exchanges without prior permission of RBI but they cannot own more than 10 percent equity in paid-up capital of Indian enterprises, while aggregate foreign institutional investment (FII) in an enterprise is capped at 24 percent. The establishment of wholly owned subsidiaries (WOS) and project offices and branch offices, incorporated in India or not. Sometimes, it is understood, that branches are started to test the market and get its flavor. Equity transfer from residents to non-residents in
mergers and acquisitions In corporate finance Corporate finance is the area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, ...
(M&A) is usually permitted under the automatic route. However, if the M&As are in sectors and activities requiring prior government permission (Appendix 1 of the Policy) then transfer can proceed only after permission. Joint ventures with trading companies are allowed together with imports of secondhand plants and machinery. It is expected that in a JV, the foreign partner supplies technical collaboration and the pricing includes the foreign exchange component, while the Indian partner makes available the factory or building site and locally made machinery and product parts. Many JVs are formed as public limited companies (LLCs) because of the advantages of limited liability.


Ukraine

In
Ukraine Ukraine ( uk, Україна, Ukraïna, ) is a country in . It is the in Europe after , which it borders to the east and north-east. Ukraine also shares borders with to the north; , , and to the west; and to the south; and has a coastli ...

Ukraine
, most of joint ventures are operated in the form of
Limited liability company A limited liability company (LLC) is the US-specific form of a private limited company A private limited company is any type of business entity in Privately held company, "private" ownership used in many jurisdictions, in contrast to a Pu ...
, as there is no legal entity form as Joint venture. Protection of the rights of foreign investors is guaranteed by Law of Ukraine "On Foreign Investment". In Ukraine, JV can be established without legal entity formation and act under so called Cooperation Agreement (Dogovir pro spilnu diyalnist; Ukr. Договір про спільну діяльність). Under Ukraine civil code, CA can be established by two or more parties; rights and obligations of the parties are regulated by the agreement. Cooperation agreement has been widely spread in Ukraine, mainly in the field of oil and Natural gas, gas production. Since the Independence of Ukraine, Corruption doesn't allow to execute the Ukraine Law, Investors need to protect their Rights and Property themselves.


See also

* Common purpose, also known as a "joint enterprise" (criminal law) * Division (business) * International joint venture * Joint venture broker * Partnership * Subsidiary


References


External links


Cornell Law School's Joint Venture Info Page
Contains legal information and relevant definitions regarding joint venture partnerships
Joint Ventures Staged a Quiet Comeback
Article written by Gerard Baynham, published in Chief Executive, evaluating joint venture performance. {{DEFAULTSORT:Joint Venture Business law Strategic alliances Joint ventures, Types of business entity