The Choice of Foreign Investment Vehicles in China: Trends, Factors and Recommendations

This study focuses on three main dominant investment vehicles in China—Equity Joint Ventures (EJVs), Cooperative Joint Ventures (CJVs), and Wholly Foreign-Owned Enterprises (WFOEs)—by tracking their development from 1979 to the present. It analyzes historical data and the new policy context after the 2020 Foreign Investment Law took effect and finds a clear trend that WFOEs have become the most common choice of foreign investors, while EJVs are slowly declining and CJVs have dropped sharply. This study also explores key factors behind these changes, such as the unique characteristics of each investment vehicle, foreign investors' views on the Chinese market, and China's policy changes like WTO accession. The mainstream view holds that WFOEs are inherently better, but this study reveals their popularity stems from specific historical stages, not inherent advantages. For foreign investors preparing to invest in China, they should choose appropriate investment vehicles based on the type of investment project, investment experience and long-term planning, while also taking into account the latest legal and policy updates. This research helps readers understand China's foreign investment environment thoroughly and provides practical advice for international investors.