A joint venture (JV) is a business entity created by two or more parties, generally characterized by
shared ownership, 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 environme ...
, 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 ...
; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities.
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 exploration, extraction, refining, transportation (often by oil tankers and pipelines), and marketing of petroleum products. The largest ...
, 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), legally United Launch Alliance, LLC, 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, a ...
,
Vevo
Vevo ( , an abbreviation for "Video Evolution", stylized as VEVO until 2013) is an American multinational video hosting service, best known for providing music videos to YouTube. The service is also available as an app on selected smart TVs, di ...
,
Hulu
Hulu () is an American subscription streaming service majority-owned by The Walt Disney Company, with Comcast's NBCUniversal holding a minority stake. It was launched on October 29, 2007 and it offers a library of films and television serie ...
,
Penske Truck Leasing
Penske Truck Leasing Co., L.P. is a joint venture of Penske Corporation, Penske Automotive Group, and Mitsui & Co. Headquartered in Reading, Pennsylvania, the company was founded by Team Penske owner Roger Penske on December 1, 1969. The firm ser ...
, 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 partn ...
.
Legal definition
In
European law
European Union law is a system of rules operating within the member states of the European Union (EU). Since the founding of the European Coal and Steel Community following World War II, the EU has developed the aim to "promote peace, its valu ...
, the term "joint venture" is an exclusive legal concept, better defined under the rules of
company law. In
France
France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...
, 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: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
, and in many
common law
In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...
countries, a joint-venture (or else a company formed by a group of individuals) must file with the appropriate authority the
memorandum of association. It is a
statutory
A statute is a formal written enactment of a legislative authority that governs the legal entities of a city, state, or country by way of consent. Typically, statutes command or prohibit something, or declare policy. Statutes are rules made by le ...
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, a company's articles of association (AoA, called articles of incorporation in some jurisdictions) is a document which, along with the memorandum of association (in cases where it exists) form the company's constituti ...
, 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 resolution
In business or commercial law in certain common law jurisdictions, an ordinary resolution is a resolution passed by the shareholders of a company by a simple or bare majority (for example more than 50% of the vote) either at a convened meeting o ...
s,
special resolution {{refimprove, date=August 2011
In 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 extraordinary resolutio ...
s and the holding of
Extraordinary General Meeting
An extraordinary general meeting, commonly abbreviated as EGM, is a meeting of members of an organisation, shareholders of a company, or employees of an official body that occurs at an irregular time.' The term is usually used where the group wou ...
s to bring the directors' decision to bear.
A
Certificate of Incorporation A certificate of incorporation is a legal document/license relating to the formation of a company or corporation. It is a license to form a corporation issued by state government or, in some jurisdictions, by non-governmental entity/corporation. Its ...
or the
Articles of Incorporation
Article often refers to:
* Article (grammar), a grammatical element used to indicate definiteness or indefiniteness
* Article (publishing), a piece of nonfictional prose that is an independent part of a publication
Article may also refer to:
G ...
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. 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 shareholders or members of a company. In practical effect, it is analogous to a partnership agreement. It can be said that ...
, 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 – 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 – 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 ...
); 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 of the Founder at board meetings.
Recently, in a major case the
Indian Supreme Court
The Supreme Court of India ( IAST: ) is the supreme judicial authority of India and is the highest court of the Republic of India under the constitution. It is the most senior constitutional court, has the final decision in all legal matters ...
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. 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.
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 romanised traditionally as Mao Tse-tung. (26 December 1893 – 9 September 1976), also known as Chairman Mao, was a Chinese communist revolutionary who was the founder of the People's Republic of China (PRC) ...
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. However, under the CJV, 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
A feasibility study is an assessment of the practicality of a project or system. A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats pr ...
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 that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and e ...
(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 smart ...
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 Corp., Ltd. (formerly Shanghai Automotive Industry Corporation) is a Chinese state-owned automobile manufacturer headquartered in Anting, Shanghai. Founded in 1955, it is currently the largest of the " Big Four" state-owned car manu ...
(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 Shanghai
operating in joint venture with US owned
General Motors
The General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and ...
. Products produced by SAIC joint venture companies are sold under marques including
Baojun
Baojun () is a Chinese automobile marque owned by a joint venture of General Motors and SAIC Motor, SAIC-GM-Wuling Automobile.
History
The Baojun marque was established in 2010 as a cheaper alternative to existing GM brands Chevrolet and Buick ...
,
Buick
Buick () is a division of the American automobile manufacturer General Motors (GM). Started by automotive pioneer David Dunbar Buick in 1899, it was among the first American marques of automobiles, and was the company that established General ...
,
Chevrolet
Chevrolet ( ), colloquially referred to as Chevy and formally the Chevrolet Motor Division of General Motors Company, is an American automobile division of the American manufacturer General Motors (GM). Louis Chevrolet (1878–1941) and ous ...
,
Iveco
IVECO, an acronym for Industrial Vehicles Corporation, is an Italian multinational transport vehicle manufacturing company. It designs and builds light, medium, and heavy commercial vehicles. The name IVECO first appeared in 1975 after a merger o ...
,
Škoda
Škoda means ''pity'' in the Czech and Slovak languages. It may also refer to:
Czech brands and enterprises
* Škoda Auto, automobile and previously bicycle manufacturer in Mladá Boleslav
** Škoda Motorsport, the division of Škoda Auto respons ...
, and
Volkswagen
Volkswagen (),English: , . abbreviated as VW (), is a German Automotive industry, motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a ...
** 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 a division of the German automotive concern Volkswagen Group in the People's Republic of China.
Volkswagen Group China enjoys sales of about 3.14 million cars (2017) in the Chinese market ...
- The numerous VW and Audi cars manufactured in China are made under two joint-venture partnerships:
FAW-Volkswagen
FAW-Volkswagen Automobile Co., Ltd. is a joint venture between FAW Group and Volkswagen Group which manufactures Audi and Volkswagen marque passenger cars for sale in China. It was founded on 6 February 1991.
FAW-VW is headquartered in the so ...
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 between Volkswagen Group and SAIC Motor. It was ...
.
* Beijing Benz Automotive Co., Ltd is a joint venture between BAIC Motor and
Daimler AG
The Mercedes-Benz Group AG (previously named Daimler-Benz, DaimlerChrysler and Daimler) is a German multinational automotive corporation headquartered in Stuttgart, Baden-Württemberg, Germany. It is one of the world's leading car manufacture ...
. 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 Ltd. is a Chinese state-owned automobile manufacturer headquartered in Wuhan, Hubei. Founded in 1969, it is currently the third largest of the " Big Four" state-owned car manufacturers of China, namely: SAIC Motor, F ...
(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, Hubei Province in the China, People's Republic of China. It is the largest city in Hubei and the most populous city in Central China, with a population of over eleven million, the List of cities in China ...
. 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 Dongfeng is the romanization of several Chinese names of which most notably "East Wind" (); it may refer to:
People's Republic of China
* Dongfeng (missile) (), series of ballistic missiles of the People's Liberation Army
* Chinese series of dies ...
,
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 corporation that designs, manufactures, and distributes engines, filtration, and power generation products. Cummins also services engines and related equipment, including fuel systems, controls, air ...
,
Dana,
Honda
is a Japanese public multinational conglomerate manufacturer of automobiles, motorcycles, and power equipment, headquartered in Minato, Tokyo, Japan.
Honda has been the world's largest motorcycle manufacturer since 1959, reaching a product ...
,
Nissan
, trade name, trading as Nissan Motor Corporation and often shortened to Nissan, is a Japanese multinational corporation, multinational Automotive industry, automobile manufacturer headquartered in Nishi-ku, Yokohama, Japan. The company sells ...
,
Infiniti
is the luxury vehicle division of the 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 ...
,
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 automotive manufacturing company which produced automobiles ...
,
Renault
Groupe Renault ( , , , also known as the Renault Group in English; legally Renault S.A.) is a French multinational automobile manufacturer established in 1899. The company produces a range of cars and vans, and in the past has manufactured ...
,
Kia
Kia Corporation, commonly known as Kia (, ; formerly known as Kyungsung Precision Industry and Kia Motors Corporation), is a South Korean multinational automobile manufacturer headquartered in Seoul, South Korea. It is South Korea's second lar ...
,
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 models under license. The original romanization of the company's name is Yue Loong, but in 1992 the company ...
.
FAW Group
China FAW Group Corp., Ltd. (First Automobile Works) is a Chinese state-owned automobile manufacturer headquartered in Changchun, Jilin. Corporation (第一汽车集团, abbreviated to 一汽) is a Chinese state-owned automotive manufacturing company headquartered in
Changchun
Changchun (, ; ), also romanized as Ch'angch'un, is the capital and largest city of Jilin Province, People's Republic of China. Lying in the center of the Songliao Plain, Changchun is administered as a , comprising 7 districts, 1 county and 3 c ...
. 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
Bestune (), previously known as Besturn, is an automotive marque owned by the Chinese automaker FAW Group.
With products based on older Mazda sedans, Besturn targets upper middle-class Chinese consumers. FAW, Besturn's owner, also manufactures t ...
/Bēnténg, Dario,
Haima,
Hongqi,
Jiaxing
Jiaxing (), alternately romanized as Kashing, is a prefecture-level city in northern Zhejiang province, China. Lying on the Grand Canal of China, Jiaxing borders Hangzhou to the southwest, Huzhou to the west, Shanghai to the northeast, and the ...
,
Jie Fang,
Jilin
Jilin (; alternately romanized as Kirin or Chilin) is one of the three provinces of Northeast China. Its capital and largest city is Changchun. Jilin borders North Korea (Rasŏn, North Hamgyong, Ryanggang and Chagang) and Russia (Prim ...
, Oley,
Jie Fang and Yuan Zheng, and
Tianjin Xiali
Tianjin FAW (officially Tianjin FAW Xiali Automobile Co., Ltd.) is an automobile company based in Tianjin, China and a subsidiary of FAW Group. Its principal activity is the design, development, manufacture and distribution of automobiles sold und ...
. FAW joint ventures sell
Audi
Audi AG () is a German automotive manufacturer of luxury vehicles headquartered in Ingolstadt, Bavaria, Germany. As a subsidiary of its parent company, the Volkswagen Group, Audi produces vehicles in nine production facilities worldwide.
Th ...
,
General Motors
The General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and ...
,
Mazda
, commonly referred to as simply Mazda, is a Japanese multinational automotive manufacturer headquartered in Fuchū, Hiroshima, Japan.
In 2015, Mazda produced 1.5 million vehicles for global sales, the majority of which (nearly one m ...
,
Toyota
is a Japanese multinational automotive manufacturer headquartered in Toyota City, Aichi, Japan. It was founded by Kiichiro Toyoda and incorporated on . Toyota is one of the largest automobile manufacturers in the world, producing about 10 ...
and
Volkswagen
Volkswagen (),English: , . abbreviated as VW (), is a German Automotive industry, motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a ...
.
*
GAC
GAC or Gac may refer to:
Companies and organisations
* GAC Group, a Chinese automotive company based in Guangzhou, Guangdong
* GAC Ireland, an Irish bus manufacturer established with Bombardier (1980–1986)
* Games Administration Committee, ...
(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 Co., Ltd. is a Chinese state-owned automobile manufacturer headquartered in Jiangbei, Chongqing.[Chongqing
Chongqing ( or ; ; Sichuanese dialects, Sichuanese pronunciation: , Standard Mandarin pronunciation: ), Postal Romanization, alternately romanized as Chungking (), is a Direct-administered municipalities of China, municipality in Southwes ...]
, 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 Japan, Japanese multinational corporation headquartered in Minami-ku, Hamamatsu, Japan. Suzuki manufactures automobiles, motorcycles, All-terrain vehicle, all-terrain vehicles (ATVs), outboard motor, outboard marine engines, wheelchairs ...
,
Ford
Ford commonly refers to:
* Ford Motor Company, an automobile manufacturer founded by Henry Ford
* Ford (crossing), a shallow crossing on a river
Ford may also refer to:
Ford Motor Company
* Henry Ford, founder of the Ford Motor Company
* Ford F ...
,
Mazda
, commonly referred to as simply Mazda, is a Japanese multinational automotive manufacturer headquartered in Fuchū, Hiroshima, Japan.
In 2015, Mazda produced 1.5 million vehicles for global sales, the majority of which (nearly one m ...
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 automotive manufacturing company which produced automobiles ...
.
*
Chery
Chery Automobile Co. Ltd., trading as Chery and sometimes known by the pinyin transcription of its Chinese name, ''Qirui'' (), is a Chinese state-owned automobile manufacturer headquartered in Wuhu, Anhui, China. Founded in 1997, it is curre ...
, 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 cat species and the only 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 the Americas and the th ...
and
Land Rover
Land Rover is a British brand of predominantly four-wheel drive, off-road capable vehicles, owned by multinational car manufacturer Jaguar Land Rover (JLR), since 2008 a subsidiary of India's Tata Motors. JLR currently builds Land Rovers ...
cars in China.
*
Brilliance Auto
Huachen Automotive Group Holdings Co. Ltd., known for its brand name Brilliance Auto Group, was a Chinese multinational automobile manufacturer holding company headquartered in Shenyang. Its products include automobiles, microvans, and automotiv ...
, 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)
* Geely-Volvo,
Geely
Zhejiang Geely Holding Group Co., Ltd (ZGH), commonly known as Geely (吉利 "auspicious"), is a Chinese multinational automotive company headquartered in Hangzhou, Zhejiang. The company is privately held by Chinese billionaire entrepreneu ...
, 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. While its core activity is the production, distributio ...
. In China, their passenger car brands include Geely Auto,
Volvo Cars
Volvo Cars ( sv, Volvo personvagnar, styled VOLVO in the company's logo) is a Swedish multinational manufacturer of luxury vehicles headquartered in Torslanda, Gothenburg. The company manufactures SUVs, station wagons, and sedans. The company's ...
, and
Lynk & Co
Lynk & Co () is a Chinese-Swedish automobile brand owned by Geely Automobile Holdings. Founded in Gothenburg, Sweden in 2016, the focus of the brand is on internet connectivity and innovative purchasing models, and targets a young professional dem ...
. 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. While its core activity is the production, distributio ...
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
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
(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 Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inv ...
, most of joint ventures are operated in the form of
Limited liability company
A limited liability company (LLC for short) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a ...
, 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
gas
Gas is one of the four fundamental states of matter (the others being solid, liquid, and plasma).
A pure gas may be made up of individual atoms (e.g. a noble gas like neon), elemental molecules made from one type of atom (e.g. oxygen), or ...
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
The doctrine of common purpose, common design, joint enterprise, joint criminal enterprise or parasitic accessory liability is a common law legal doctrine that imputes criminal liability to the participants in a criminal enterprise for all reaso ...
, also known as a "joint enterprise" (criminal law)
*
Division (business)
A division, sometimes called a business sector or business unit (segment), is one of the parts into which a business, organization or company is divided.
Overview
Divisions are distinct parts of a business. If these divisions are all part of ...
*
International joint venture
An international joint venture (IJV) occurs when two businesses based in two or more countries form a partnership. A company that wants to explore international trade without taking on the full responsibilities of cross-border business transaction ...
*
Joint venture broker
A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acces ...
*
Partnership
A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments o ...
*
Subsidiary
A subsidiary, subsidiary company or daughter company is a company owned or controlled by another company, which is called the parent company or holding company. Two or more subsidiaries that either belong to the same parent company or having a s ...
References
External links
Cornell Law School's Joint Venture Info PageContains legal information and relevant definitions regarding joint venture partnerships
Joint Ventures Staged a Quiet ComebackArticle written by Gerard Baynham, published in Chief Executive, evaluating joint venture performance.
{{DEFAULTSORT:Joint Venture
Business law
Strategic alliances
Types of business entity