Applicable U.S. and other foreign laws. Even though a joint venture with a Chinese partner dilutes ownership and control, it is the business structure selected by most foreign investors. The principle advantage of a joint venture is that you have a Chinese partner representing you with Chinese authorities, Chinese employs, vendors, and local customers. Another major advantage is that joint ventures is more free of Chinese laws, regulations and business customs that tend to hamper the other types of business entities. The foreign company may take a majority interest in both types of joint ventures.
Joint ventures involving production enjoy tax holidays, deductions and exceptions.
For example joint venture should be free of the standard 33 percent combined corporate tax for the first two years following the year in which it began to make a profit, and have corporate taxes in three through five discounted by 50 percent. When you have WFOE, you do not have to share your profits with a Chinese company and you can introduce whatever management system you like. There is much evidence, however. To qualify for a WFOE, a foreign company has to demonstrate that its Chinese business will primarily export or that it will be making an advanced technology. The Chinese agent could be a Chinese national or company.