Basic forms of foreign investment

• China-foreign joint ventures (JV)
  China-foreign joint ventures may also be called equity joint ventures. It is established by foreign companies, enterprises and other economic organizations or individuals and Chinese counterparts to invest to invest together in China (Rights and duties of each Bide are stipulated in the contracts signed by different sides. China-foreign).
• Its characteristics are as follows :all joint side invest together, manage together, share risks according to the investment proportion and share losses and benefits, Investment of every side should be converted to investment proportion and the proportion of foreign investment can't shill ranks a considerable proportion in attracting foreign investment.
• China-foreign co-operative enterprises
  In establishing this kind of enterprises, usually foreigners provide all or most of funds, Chinese enterprises or individuals provide land, factory buildings, available device and facilities, some of which also provide some fund.
• Wholly foreign-owned enterprises (WFOE)
  It means enterprises established in china by foreign companies, in which all the funds are invested by foreign investors.
• According to the stipulation of the foreign Investment Enterprise Law, establishing this kind of enterprises should favor the development of China's economy, and at least meets with one of the following: adopting advanced international technology and device, most or au products exported. The form of it is commonly Limited Liability Company.
• Cooperative development
  It is the short form of offshore and land co-operative oil prosecution and development 2t is now a way of economic co-operation widely adopted in international natural resource field. 2t5 characteristics are high risk, high investment and high benefits. The process is usually divided in to three stages: prosecution-development and manufacture. 2t only rank s a small rate compared with the former three kinds.

New investment means

When China gradually broadens investment fields and further open domestic markets, the government also positively explores and broadens new means to utilize foreign funds.

• BOT (Build-Operate-Transfer): The BT Items in the field of projects for basic facilities have been tried for example, the BOT Item in Guangxi Laibin Electric Power Plant has been approved.
• Investment Company: In April 1995, the Foreign Trade and Economic Administration published Temporary Provisions On Foreign Investment Running Investment Companies, so as to encourage large overseas companies to develop their serial investment plans. Up to now, more than 160 investment companies have been set up, whose investment activities have been constantly broadened.
• Foreign Investment stock Company: Stock companies may be set up in ways of initiation or collection. The present foreign investment limited liability companies may apply for alteration in to joint stock companies limited.
• Incorporative purchase: Trans-international inoperative purchase has come to one of the main ways of direct international investment. At present, China is researching and formulating relevant policies.

Management Procedures for Foreign Investment Enterprises

Establishment Procedure
According to the current rational laws and regulations, in establishing foreign investment enterprises, a term wise government approval and registration system is being carried out, In applying for establishment of China-foreign joint ventures and co-operative enterprises, four steps are generally needed:

1. Submit item propositions for establishing enterprises; after the approval from relevant departments, investors may embark on work with item feasibility study as center;
2. Submit reports on item feasibility study. After approval, investors may negotiate and sign laws and documents such as contracts and statutes of establishing enterprises;
3. Submit contracts and statutes of establishing enterprises; after approval from foreign trade administrations, the Approving authorities may issue approval license to foreign investment enterprises.
4. Investors may go through formalities in industrial and commercial administrations with the approval license issued by approving authorities.

The procedure of establishing foreign funded enterprises is easy, after initial item application is approved in a written form by the governmental approving authorities, relevant documents such as formal application and company statutes may be submitted. After approval, investors may go through formalities of registration with approval license.

Time limit for operation and enterprise termination:

1. Time limit for operation: The time limit of foreign investment enterprises, usually 10-30 years, 20 years at longest, may be stipulated by investors through negotiation under national regulations in terms of specific conditions of different industries and items. If particularly approved by the State Council, time limit needs no stipulation. For foreign investment enterprises with appointed time limit for operation, when the expiration comes, their termination comes, If investors want to prolong the time of operation, they may apply to approving authorities for approval at least 180 days before the former time limit.
   
   During the Period of enterprise operation, enterprises have self-operation power, and the government can't implement nationalization and collection about foreign investment enterprises, under special conditions, any collection in line with the need of social public interests should be done in accord with law procedures, and some relevant Compensation should be given to the enterprises.
2. Termination:
   If any terminal conditions appear in foreign investment enterprises, the enterprises should submit termination application to approving authorities, with the approval date as that of enterprise termination.

Limits of approval powers
China implements Level-to-Level administration for foreign investment, the provinces, municipalities directly under the Central Government autonomous regions and singly-planned cities have powers to approve the investment value not more than US & 30 million. The items of restricted-class and above the limited level should be approved by the Foreign Trade and Economic Cooperation Administration.