A joint venture (JV) is an association of several parties with the aim of implementing a common project. It is based on making equal investments in it, from the point of view of which the essence and economic foundations of the joint venture can be considered.
The essence of the joint venture
A joint venture is a combination of several parties to implement a project. It is based on an equal investment. A joint venture is a specific type of property that arises in the course of the development of economic international cooperation. Due to the fact that all parties make equal investments, the services and goods produced are jointly owned by foreign and domestic partners. The products are sold both abroad and in the country where the joint venture is based.
In essence, a joint venture can be characterized as the pooling of investments that are owned by several legal entities or individuals. At the same time, an important condition must be met - one of the parties must be foreign.
The objectives of the joint venture are entirely based on investment. Thus, investments from a foreign party guarantee that modern foreign technologies will be obtained, which will increase the competitiveness of the product and expand its export. In addition, due to the receipt of material resources, component parts and other reserves from a foreign partner, it becomes possible to improve the material and technical support of products.
The economic foundations of the joint venture
Since the joint venture is an independent business entity, it has a statutory fund formed from both initial and additional contributions made by participants in this type of business. The contribution is made not only in the form of cash, but also in the form of structures, knowledge, equipment and other material values.
Usually investments of a foreign participant are presented in the form of licenses, equipment, and so on, and are valued both in Russian and in foreign currency. The contribution of the Russian participant is in the form of natural resources, structures and land and is valued in the same way as the contribution of the foreign partner.
Joint ventures have their own balance sheet. Their functioning takes place against the background of self-sufficiency, self-financing and commercial calculation. Production programs are developed and implemented by the joint venture participants, the state does not bear any responsibility for the results of activities Despite this, the property is protected by law and is subject to compulsory insurance. In addition, property cannot be forcibly alienated for payment or temporarily seized by the state. All this is possible thanks to the investment system.
