China Law Blog

If someone gets into a JV with a Chinese company/person and is not getting their agreed upon share of revenues, how realistic is it to have a successful lawsuit and get full monetary recovery, if it goes that far?

Joint ventures in or with China seem like such risky propositions. There are just too many cultural and legal gaps between us.

The statistics provided by the Ministry of Commerce of China shows that from Jan to Sept of 2009 the amount of newly established equity joint ventures declines 15.09% compared with that of 2008, well the amount of WFOEs declines 22.64%. In addition to the economic reason and legal restrictions, I think there are some other reasons, especially when the business is an emerging one in China and is profitable.

Regarding the protection for the foreign party, if we notice the fact that most disputes arise in those joint ventures where neither party can control, we can easily understand why control is the key point. But how to control is a complicated issue because Chinese law makes it not so easy for either party to completely control the joint venture. But for the foreign investors I think what they concern most is whether they can make profits and how to make profits. So it's better that the protection is designed case by case based on what advantages the foreign investors have. Of course, there are some common protection choices.

@ Wallice,

Thanks for the viewpoint. The ones I am looking at would not involve control, I realize that is a huge sticking point, I am just interested in getting my agreed percentage (and the book keeping being honest, so I that I am getting the the correct amount).