The form of direct foreign investment most often adopted in China is Chinese-foreign equity joint ventures, Chinese-foreign co-operative ventures, wholly foreign-owned ventures and co-operative exploitation. With the development of the open door policy, there has been a gradual increase in the forms of investment, including that of holding companies. In making decisions on investing in China, foreign investors may compare the characteristics and advantages of various forms of investment before selecting an appropriate form.
Chinese-foreign equity joint ventures are enterprises established in China with joint investment from foreign companies, enterprises and other economic organizations or individuals as well as from Chinese companies, enterprises or other economic organizations. In such enterprises, the profits and losses are shared pro rata according to the investors' relative shares of investment. The parties to the joint venture may make their investment in the form of currency or with such items as buildings, factories, machinery, equipment or other materials, industrial property rights, proprietary technology, and rights to the use of sites, as valued. Generally, the ratio of investment by the foreign party to the joint venture shall not be lower than 25 percent. The corporate form of the Chinese-foreign joint venture is the limited liability company, with the Board of Directors being the highest authority of the venture. Along with the development of China's experiment of introducing new investment forms, a small number of Chinese-foreign joint ventures have adopted the corporate form of joint stock company.
Chinese-foreign co-operative joint ventures or Chinese-foreign contractual joint ventures are enterprises established in China with investment or conditions for co-operation jointly offered by foreign companies, enterprises, other economic organizations or individuals as well as by Chinese companies, enterprises or other economic organizations. In an equity joint venture, the profits and losses are shared pro rata according to the investors' relative shares of investment,