JV vs WFOE - How to Choose Between the Options

March 2004 China Briefing

This issue deals with the options investors face when choosing between a joint venture partner in China, or going it alone with a wholly foreign owned enterprise, and the pros and cons of each. The main article "Joint Ventures vs WFOEs" by Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates, details the regulatory differences between them, the evaluation of potential partners assets, intangible assets, technology transfer, operational management issues, and due diligence matters. This issue also breaks the story of the Lehman Brown metatagging court case - a landmark case over IP rights that has affected many legal and tax firms in China in terms of having their identities unwittingly used to promote Lehman Brown instead - and the legal battles that Lehman Brown now face as a result. It identifies disturbing loopholes in China's ability to police and administer international accounting firms in China and demonstrates how Lehman Brown were able to evade these in this deepening China professional services sector scandal. Regional updates are also provided, with articles from Chris Devonshire-Ellis, "Selling Spare Parts For Service Via A Manufacturing Operation in Tianjin", Lulu Zhang, Regional Partner, Dezan Shira & Associates Shanghai and "New Export VAT Rebate Regulations", Alberto Vettoretti, Regional Partner, Dezan Shira & Associates South China, "Dealing With Contracted Projects in South China", and a Western Regional overview "Free Land Given To Encourage Foreign Investment Projects".