Tran, Oanh Thi --- "Wei: Investing in China: The Law and Practice of Joint Ventures" [2003] IntTBLawRw 16; (2003) 8 International Trade and Business Law Review 431

By Yuwa Wei, Investing in China: The Law and Practice of Joint Ventures, Federation Press, Sydney, 2000, ISBN 1 86287 345 3

Investing in China intends to study the legal, business and cultural considerations for foreign, and particularly Australian, investment in China. Wei, the author, argues that the most effective business structure for investment in China is the joint venture, and supports this argument by an analysis of the taxation, management, marketing and financial consequences in an historical, cultural and legal setting. However, she also carefully incorporates the possibility of variant purposes of foreign investment, and evaluates different types of business structures pursuant to these same criteria. Therefore, she has also provided a useful guidebook for anyone interested in investing in China.

In her second chapter, Wei outlines China’s economic reform programme and its emergence into a market-driven economy. She emphasises China’s strategic importance, both political and economic. She also discusses the most viable regions for investment. In discussing the policies and practices of China in relation to foreign investment, she highlights the desirability of China as an investment venue. In addition, she indicates that China is an important target of Australian foreign investment due to its proximity and economic potential. However, previous investments have generally been under-performing. The author identifies the reasons for this as lack of understanding of Chinese consumers of distribution and retail structure, operational inefficiency and inappropriate choice of business structure.

The major part of the book is aimed at discussing the relevant concerns in choosing a business structure. Wei identifies these structures as equity and contractual joint ventures, wholly foreign owned enterprises, branches of foreign businesses in China, and other types of investment vehicles such as technology transfers and compensation trades. In future editions it is suggested that she should incorporate a more detailed analysis of the cultural and social aspects of China, which she emphasises as the main pitfall for investors.

This reviewer found certain chapters to be of particular interest. In Chapter 3, Wei discusses the Chinese legal system and legal framework for foreign investment. Here she is concerned to highlight China’s growing stability, the development of the rule of law and the safety of investing in China. In Chapter 4, she discusses China’s protection of intellectual property, again emphasising China’s stability and legal security. Chapter 9 discusses China’s dispute resolution procedures, these being mediation, arbitration and the legal process, explaining China’s court system. In this forum, the author also discusses the role of international law, and conflict of laws to which the parties to a dispute must submit or may choose to submit.

Finally, the book is concerned with investigating the relevant concerns of a foreign investor: business structure, taxation consequences, management and marketing and the deployment of profits and capital. In this respect, the title is a misnomer. Wei does not investigate the law and practice only of joint ventures, but the law and practice of foreign investment. Joint ventures are merely the most efficient and predominant structure of foreign investment in China.

In Chapters 5–8, the author addresses matters of concern to investors. In discussing business structure, she highlights China’s encouragement of joint ventures. However, she usefully identifies the advantages and disadvantages of each investment structure in overall terms. The joint venture in China has a different status to that of a joint venture in Australia; in particular, it can be a legal entity and therefore it can have limited liability. In other chapters, she discusses the advantages and disadvantages for each business structure in specific terms, relating to taxation benefits and consequences, issues of control and laws relating to repatriation and remittance of profits.

Wei has thus written a useful guidebook for investors interested in China. Her main concern is to highlight China’s desirability as a destination for investment, but also to indicate the necessity of considering different cultural, social and legal systems in evaluating investment choices. Her work is easy to read and she provides a very useful table in her conclusion, which reiterates, in summary form, the conclusions she has reached about each of the business structures.

Federation Press should be congratulated on the publication of this useful text. It is especially important that Australian legal publishers continue to focus on Asian law.

Oanh Thi Tran