Capital contribution by equity

New Measures by the State Council means foreigh investors can establish partnerships in China. More than two foreign enterprises or individuals can establish a foreign invested partnership ("FIP") solely or together with Chinese individuals, legal persons or other organisations in China.

Foreign investors to an FIP are only allowed to contribute capital in the form of cash, either foreign currency or Renminbi.

This provides a new investment vehicle to foreign investors who may, after 1 March 2010, choose to establish business in China through a partnership enterprise, in addition to a Sino-foreign joint venture ("JV") or a wholly foreign owned enterprise ("WFOE").

 

Comdaq has a most thorough coverage on this site from Cameron McKenna. It says that the Measures give FIP legal status under Chinese law and provide a new investment vehicle for foreign investors. To understand all the implication you should go to the site and read the full paper.