Joint Venture in China

Joint Venture in China

by Arnaud Guyard

About Project and Initial Work.

Our customer is a world-class specialty rubber manufacturing company, leader of truly endless belting and of other specialty rubber belting.

Our customer asked us to develop contacts with a qualified company of China dedicated to design and manufacturing of rubber conveyor belts.

We identified the Chinese partner and arranged for the signature of a MoU, whereby the two parties confirmed their interest to set up a Joint Venture company (JVC) for the production of truly endless belts to be sold in China and in other countries worldwide.

joint venture china

The feasibility study.

The JVC would be established in China on the basis of the following criteria.

  • The foreign party shall supply the technical know-how for manufacturing the products, including the necessary training of the JVC’s technicians in the JVC facility in China.
  • The proprietary plant equipment, machinery and tools to be used in the production shall be purchased by the JVC.
  • The industrial building that will host the plant, as well as the necessary infrastructure, utilities and facilities, will be supplied by the local partner.
  • The raw materials shall be purchased locally or shall be manufactured by the local partner.
  • The foreign partner shal shall continue to provide any improvement in the technology for manufacturing the products.
  • The local partner shall complete the official formalities before its Government authorities for the establishment and registration of the JVC.
  • The JVC shall be established in an Economic zones that benefits from incentives granted by the Chinese government, such as reduced corporate income tax, tax holidays, reduced land use fees and simplified entry and exit procedures.

In case the project is successful, the parties may consider expanding the cooperation in other business areas or product ranges.

joint venture china

The advantages.

The locally available labour is more than adequate, in terms of skills and quantity, to support the requirements of operations.

The key concept for the proposed business is to create value for the Customers, that is made of quality, price and timely delivery.

While setting up the business, both the foreign and local partner shall display an utmost commitment for quality in all phases and aspects of the Projects and of the JVC operations, from marketing and sales up to manufacturing and delivering products and services.

The expected competitive advantages of the JVC are associated to the following items:

  • the cost of local labour, which is a key cost factor of operations, is very competitive compared to international standards
  • the plant is close to the Customers’ facilities, thus reducing time and cost of freight and transport
  • the products and services sold by the JVC in China shall take advantages of the exemption from custom duties, custom clearance and other dues
  • the JVC is expected to be located in an Economic zone that benefits from incentives granted by the Chinese government, such as reduced corporate income tax, tax holidays, reduced land use fees and simplified entry and exit procedures.
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