Foreign investments in China normally take forms in direct (FDI) and indirect investment. The mostly employed forms of FDI are Sino-Foreign Equity Joint Venture (EJV), Sino-Foreign Co-operative Joint Ventures (CJV), Wholly-Owned Foreign Enterprises (WOFE), Foreign-invested companies limited by share (FICLBS) and Joint Exploitation (JE). Indirect investment includes compensation trade, processing and assembling etc.

(1)Sino-Foreign Equity Joint Ventures (EJV)

These are enterprises established in China with joint investment from foreign companies, enterprises or other economic bodies and Chinese economic bodies. As the name suggests, such enterprises involve joint investment, operation and share of risk in proportion to the amount of investment by the respective parties. Each party is accordingly jointly responsible for the profits and losses of the enterprise. Investment can come in the form of (amongst other things) currency, buildings, industrial property or equipment. In general, the level of investment offered by the foreign company should not be less than 25%.

(2)Sino-Foreign Co-operative Joint Ventures (CJV)

Sino-foreign co-operative joint ventures also refer to Chinese-foreign contractual joint ventures. They are enterprises established in China with investment or conditions for co-operation jointly offered by foreign companies, enterprises or other economic bodies as well as by Chinese economic bodies. The rights and obligations of the parties involved are determined by the contracts signed by the parties from the outset of the venture. These ventures tend to involve the foreign partner providing most or all of the funds whilst the Chinese partner contribute land, facilities and a perhaps a limited amount of funding.

(3) Wholly-Owned Foreign Enterprises (WOFE)

They are enterprises set up in China by foreign companies or economic bodies in accordance with Chinese law with the investment entirely provided by foreign investors. The corporate form of foreign enterprises in China is generally the limited liability company.

(4) Foreign-invested companies limited by shares (FICLBS)

Foreign-invested companies limited by shares are stock limited companies set within China's territory by foreign companies, enterprises, or other economic organizations with Chinese companies, enterprise or other economic organizations, which is established according to the principle of stock. The total capital of a FICLBS should be divided into shares of equal amount. The shareholders of a FICLBS should bear liabilities to the FICLBS to the extent of the capital they subscribed. A FICLBS shall bear liability for the debts of the FICLBS within the limit of their assets. Both Chinese and foreign shareholders jointly hold the shares of the FICLBS. The shares purchased and held by foreign shareholders should account for over 25% of the capital of the FICLBS. Qualified FICLBS can apply to issue A shares or B shares and list on the foreign market.