The investors must contribute to the registered capital of the company. The registered capital is defined as "the total amount of capital registered with the registration authority for establishing the joint venture. It is the combined amount of capital contributed by all parties to the venture. The registered capital of a foreign invested enterprise is generally indicated in RMB." The registered capital can be contributed in cash, buildings, premises, equipment, know-how, and intellectual property. The parties on the principle of reasonableness and fairness shall ascertain the price of the contributed materials. Machinery and other materials that are contributed must be indispensable to the project; must not be manufactured in China or if they are the price of manufacturing is too high; the prices fixed shall not exceed current market price. The know-how or intellectual property contributed shall be capable of manufacturing new products urgently needed in China or products suitable for export; or products capable of improving markedly the performance quality of existing products and raising productivity; or capable of savings in raw materials, fuel or power.
For a WFOE, the registered capital is the total amount of capital for the establishment as registered with the authorities. The amount of the registered capital must correspond to its scale of business. If contributed in cash, it can be funded through a loan from a bank or a venture partner. If it is a bank loan and it is taken from off shore approval is required from the State Administration of Foreign Exchange.
