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Forms of investment

Guangdong utilizes all international prevailing forms of foreign loans and foreign investment, but foreign direct investment in the forms of Sino-foreign equity joint venture, Sino-foreign cooperative joint venture and wholly foreign owned enterprise is the mainstay. Export-oriented processing and assembling, compensation trade and international leasing are also effective forms to utilize foreign capital in Guangdong Province.

Sino-Foreign Equity Joint Venture

A Sino-foreign equity joint venture refers to an enterprises jointly established, within the Chinese territory and with the approval of the Chinese government, by a foreign company, enterprise or other economic organization or individual and a Chinese company, enterprise or other economic organization or individual. Its features are joint investment, joint management, and joint responsibility for profit and loss and sharing risks. A Sino-foreign equity joint venture is a limited liability company and has the status of a Chinese legal person. The Chinese and foreign parties are liable for its debt and share its right and interest to the extent of the amount of capital contributed by them and in proportion to their capital contributions. Chinese law protects its rightful business activities. The proportion of the foreign party's contribution to the registered capital shall be no less than 25%. The parties to the joint venture can make their investment in cash, in providing building, plant premises, machines and equipment or other materials, industrial property right, know-how, right to use a side, etc. The profit and other rightful interest obtained by foreign investors can be repatriated freely or ploughed back in China

Sino-Foreign Cooperative Joint Venture

A Sino-foreign cooperative venture refers to an economic entity jointly established, within the Chinese territory and with the approval of the Chinese government, by a foreign company, enterprise or other economic organization or individual and a Chinese company, enterprise or other economic organization or individual according to the cooperative joint venture contract between the two parties. It is a contractual joint venture. The parties to a Sino-foreign cooperative joint venture shall provide in the cooperative joint venture contract for matters such as investment or cooperation conditions, rights and obligation, the division of earnings, the sharing of risks and debts, the form and method of business operation and management, and the ownership of property upon termination of the cooperative venture. It is different from equity joint venture in that the parties to an equity joint venture share earnings in proportion to their respective contributions. A cooperative joint venture can be either a legal person or a non-legal person. In a cooperative joint venture, the Chinese party usually provides the right to use a piece of land, natural resources, labor and the existing plant building, or part of the capital; and the foreign party is responsible for providing capital, technology and key equipment.

Wholly Foreign-Owned enterprise

A wholly foreign-owned enterprise, also call foreign enterprise, refers to an enterprise established within the Chinese territory in accordance with the relevant Chinese laws and with all the capital being invested by a foreign company, enterprise or other economic organization or individual. For establishing a wholly foreign-owned enterprise, the foreign investor must make investment in cash or equipment and the registered capital must be commensurate with the size of operation and the social and economic liability of the enterprise. The profit obtained and other lawful interests of a wholly foreign-owned enterprise are protected by Chinese laws.

Share-holding limited Liability Company with Foreign Investment

A share-holding limited liability company with foreign investment is a company with the statue of a corporate legal person, jointly established within the Chinese territory and upon the approval of the Chinese government, by a foreign company, enterprise or other economic organization or individual and a Chinese company, enterprise or other economic organization or individual. The company's capital is divided into equal shares, the shareholders assume liability towards the company to the extent of their respective share holdings, and the company is liable for its debts to the extent of all its assets. The Chinese and foreign shareholders jointly own the stocks of the company. The stocks purchased and owned by the foreign shareholders shall be no less than 25% of the registered capital of the company. It is a form of foreign invested enterprise. The relevant provisions of the laws and regulations applicable to foreign invested enterprises are applicable to it.

Export-Oriented Processing and Assembling

In export-oriented processing and assembling, a foreign business provides raw materials, parts, components or drawings, a Chinese business processes them or assembles them into finished products which are returned to the foreign party for sale, and the Chinese party charges a fee for the processing and assembling; or, the foreign party also provides production equipment with or without a price and fund for building the plant premises, the Chinese party collects a processing and assembling fees. The production equipment with a price provided by the foreign party shall be paid by the Chinese party in installment using the processing fee.

Compensation Trade

On the basis of credit, the foreign party provides the Chinese party with capital or equipment, technology and raw materials and undertakes to buy a certain quantity of products from the Chinese party. The Chinese party compensates in installment the foreign party directly or indirectly, i.e., uses the products manufactured with the equipment and technology provided by the foreign party or other products agreed upon with the foreign party or repay in installment the equipment and interest.

International leasing

Guangdong mainly adopts three kinds of leasing: financial, operating and comprehensive leasing.

Under the financial lease, it is actually long-term credit extended by a leasing company to its client; that is, the leasing company will first pay for the purchase of the equipment selected by the client and then lease to the client. In the course of the use of the equipment, both parties shall not arbitrarily terminate the contract; the lessor shall retain the ownership of the equipment while the client shall possesses the right to use; the client is responsible for the maintenance of the equipment and the leasing company shall collect rents from the client. Upon expiry of the lease, the client may require an extension of the lease or purchase the leased equipment at a negotiated price.

Under the operating lease method, the leasing company will provide equipment needed by the client and be responsible for the maintenance and repair of such equipment while the client shall pay rents according to the lease contract and return the equipment upon termination of the lease.

The Comprehensive lease is a method whereby lease is combined with equity or contractual joint ventures or lease is combined with export-oriented processing and compensation trade; but the method of combining lease with equity or contractual joint venture shall be the portion outside the registered capital of the joint venture.


The BOT method means that a contractor undertakes a certain industrial project or infrastructure facility, including its building, operating, maintenance and transfer; the contractor operates such facility in a fixed term of period and is permitted to recover its investment, operating and maintenance expenses and other costs. Upon the expiry of the specified term of period, the contractor shall transfer the project to the government of the place where the project is located.


Dongguan is a newly-rising industrialized city in China, which is well-known for its developed manufacturing and industrial chain. Meanwhile, it is an international manufacturing base with pillar industries of electronic information, communication equipment, textile and garment, furniture, building material, toy, paper-making, food and beverage, hardware and plastics, etc. Take Dongguan’s IT industry for example, more than 3700 enterprises establish an important manufacturing base and sourcing center of IT products in the world.

What's New

Mayor of Dongguan city, Yuan Baocheng, met the Hungarian delegation led by Istvan Uihelyi, vice chairman of Hungary Parliament, on November 18th.
China Foreign Trade E-Commerce Meet ing & The 2nd FTF Annual Meeting 2012 was held in Song Shan Lake, central part of Dongguan city, on November 8th.
China Processing Trade Products Fair (CPTPF), held from September 16 to 19, consisted of 10 special events such as the high-level forum for development of processing trade, high-level dialog of circulation trade enterprises and processing trade enterprises and procurement linkage, which increased the influence and effectiveness of CPTPF and achieved a win-win deal.
Humen Port succeeded in attracting the project of South China Petrochemical Trading Center, up to 3 billion RMB, at a recent promotion in Shenzhen.