Until recently, there were no guidelines on how foreign investment should be made because of China`s restrictive nature vis-à-vis foreign investors. Following Mao Zedong`s death in 1976, initiatives began to be implemented in foreign trade and existing foreign direct investment legislation was clarified in 1979, while the first Sino-foreign enterprise took place in 2001.  The body of the law has improved since then. The joint enterprise contract with the AJE statutes are the two most fundamental legal documents of the project. The articles reflect many provisions of the Joint Enterprise Treaty. In the event of a conflict, priority is given to the JV document. These documents are prepared at the same time as the feasibility report. There are also ancillary documents (called offsets in the United States) on the know-how and supply agreements for brands and equipment. Use a joint business model written by a legal expert to ensure that all the necessary information is contained and that you are fully protected in the unfortunate event that something goes wrong. The joint enterprise agreement specifies who will contribute to the operation.
The goal is to ensure that each party understands what it needs to do and that it is bound by that commitment. Sign a joint venture agreement if you intend to pool resources with another entity to pursue a common goal, especially when it comes to sensitive information or incentive agreements. A joint venture can use the combined resources of both companies to achieve the company`s objective. One company could have a well-established manufacturing process, while the other company has superior distribution channels. Parties to EJV, CJV or WFOE establish a workable study that has been described above. It is a non-binding document – the parties have the freedom to choose not to proceed with the project. The feasibility study must cover the fundamental technical and economic aspects of the project before the parties are able to formalize the necessary legal documents. The study should provide the details that were previously discussed as part of the feasibility study [citation required] (submissions from the Chinese partner).