A mid-sized component manufacturer from South Asia region intended to set up a joint venture entity in China for manufacturing transmission components. The region was new to the Client however the business opportunity seemed promising. They approached DVS to guide them in setting up and operationalising the venture in tax and business friendly manner.
Team of specialists from DVS understood the present and proposed business model of the client. Given the geography of their operations and the clientele market to be served, we highlighted the following larger issues which needed to be considered prior to finalising on the JV:
- The foreign exchange impact of base currency
- Basis the location of clientele, the ease of banking operations and types of facilities required
- Tax impact on revenues and capital gains on exit
- Ease of doing forex transactions
- Dividend payout ratio
Considering the above mentioned issues and after thorough deliberation with the Client, an appropriate holding company structure based out of Asia which would optimise the ease of doing business and more importantly fulfill the long term business strategy outcomes was suggested. The structure was subsequently implemented and successfully managed by team DVS.