What is the best type of investment in China: joint venture, wholly-owned subsidiary, or other?
The answer depends upon the industry, the size of the enterprise, and how much money you are willing to invest. The most common investment route for Western firms used to be an Equity Joint Venture (EJV) with a Chinese company, usually a State-Owned Enterprise ( SOE ). The advantage of this approach is that your partner can usually provide a building, or a site to build on, manpower, connections for gaining approval, and sometimes capital financing. The disadvantage is that you have less control over manufacturing and technology, and are sometimes stuck if the Chinese partner is not able to perform up to your expectations. In 2004, Wholly Foreign-Owned Enterprises (WFOEs) are the most popular investment choice for foreign firms, but are limited to certain industries. Some large Western firms such as Motorola have successfully launched manufacturing ventures in this manner, and can more easily control technology and quality. Because you are starting from scratch, however, gaining approv
