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55-791: Dow Corning was formally established in 1943 as a joint venture between the American conglomerates Dow Chemical and Corning Glass to explore the potential of silicone and was a manufacturer of products for use by the U.S. military in World War II. The company began operating its first plant, in Midland, MI, in 1945. Dr. E. C. Sullivan was named president, and Dr. William R. Collings was named general manager in 1943. Dr. Collings later became president from 1954 until 1962. It expanded into Canada and Europe in 1948, and into South America and Japan in 1961. A large, majority-owned subsidiary of Dow Corning Corporation

110-1013: A temporary partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture where the parties are " co-venturers ". The venture can be a business JV (for example, Dow Corning), a project/asset JV intended to pursue one specific project only, or a JV aimed at defining standards or serving as an "industry utility" that provides a narrow set of services to industry participants. Some major joint ventures include United Launch Alliance , Vevo , Hulu , Virgin Media O2 , Penske Truck Leasing , and Owens-Corning . According to Gerard Baynham of Water Street Partners, there has been much negative press about joint ventures, but objective data indicate that they may actually outperform wholly owned and controlled affiliates . He writes, "A different narrative emerged from our recent analysis of U.S. Department of Commerce (DOC) data, collected from more than 20,000 entities. According to

165-593: A 1998 $ 3.2 Billion class action settlement. As a result, Dow Corning was in bankruptcy protection for nine years, ending in June 2004 during which time it largely withdrew from clinical markets. Although a number of independent reviews, including the Institute of Medicine in the United States, subsequently indicated that silicone breast implants do not cause breast cancers or any identifiable systemic diseases, on 21 March 2017,

220-439: A 2.2 percent average ROA, while wholly owned and controlled affiliates in the U.S. only realized a 0.7 percent ROA." In European law , the term "joint venture" is an exclusive legal concept, better defined under the rules of company law . In France , the term "joint venture" is variously translated as "association d'entreprises", "entreprise conjointe", "coentreprise" or "entreprise commune". A JV can be brought about in

275-532: A business. This group includes land , buildings , machinery , furniture , tools , IT equipment (e.g., laptops), and certain wasting resources (e.g., timberland and minerals ). They are written off against profits over their anticipated life by charging depreciation expenses (with exception of land assets). Accumulated depreciation is shown in the face of the balance sheet or in the notes. These are also called capital assets in management accounting . A company which invests too much of it capital in assets

330-517: A company. By its formation, the JV becomes a new entity with the implications that: On the receipt of the Certificate of Incorporation, a company can commence its business. This is a legal area and is fraught with difficulty as the laws of countries differ, particularly on the enforceability of "heads of" or shareholder agreements. For some legal reasons, it may be called a Memorandum of Understanding . It

385-419: A new market, particularly emerging market ; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities. Most joint ventures are incorporated, although some, as in the oil and gas industry , are "unincorporated" joint ventures that mimic a corporate entity. With individuals, when two or more persons come together to form

440-485: A principal disadvantage is absence of an interested and influential Chinese party. As of the 3rd Quarter of 2004, WFOEs had replaced EJVs and CJVs as follows: (*)=Financial Vventures by EJVs/CJVs (**)=Approved JVs These enterprises are formed under the Sino-Foreign Investment Act. The capital is composed of value of stock in exchange for the value of the property given to the enterprise. The liability of

495-570: A result, asset managers use deterioration modeling to predict the future conditions of assets. Depreciation is applied to tangible assets when those assets have an anticipated lifespan of more than one year. This process of depreciation is used instead of allocating the entire expense to one year. Tangible assets such as art, furniture, stamps, gold, wine, toys and books are recognized as an asset class in their own right. Many high-net-worth individuals will seek to include these tangible assets as part of their overall asset portfolio. This has created

550-423: A value to the firm because they give the firm an advantage in the marketplace. Intangible assets include goodwill , intellectual property (such as copyrights , trademarks , patents , computer programs ), and financial assets, including financial investments, bonds , and companies' shares . IFRS (International Financial Reporting Standards), the most widely used financial reporting system, defines: "An asset

605-435: A year or in the operating cycle (whichever is longer), without disturbing the normal operations of a business. These assets are continually turned over in the course of a business during normal business activity. There are 5 major items included into current assets: Marketable securities : securities that can be converted into cash quickly at a reasonable price The phrase net current assets (also called working capital )

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660-399: Is a present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits." The definition under US GAAP (Generally Accepted Accounting Principles used in the United States of America): "An asset is a present right of an entity to an economic benefit." CON 8.4 provides the following discussion of

715-404: Is allowed to enter into contracts with appropriate government authorities to acquire land use rights, rent buildings, and receive utility services. In this it is more similar to a CJV than an EJV. WFOEs are expected by PRC to use the most modern technologies and to export at least 50% of their production, with all of the investment is to be wholly provided by the foreign investor and the enterprise

770-648: Is also considered an asset). The balance sheet of a firm records the monetary value of the assets owned by that firm. It covers money and other valuables belonging to an individual or to a business . Total assets can also be called the balance sheet total . Assets can be grouped into two major classes: tangible assets and intangible assets . Tangible assets contain various subclasses, including current assets and fixed assets . Current assets include cash , inventory , accounts receivable , while fixed assets include land , buildings and equipment . Intangible assets are non-physical resources and rights that have

825-447: Is any form in which wealth can be held. There is a growing analytical interest in assets and asset forms in other social sciences too, especially in terms of how a variety of things (e.g., personality, personal data, ecosystems, etc.) can be turned into an asset. In the financial accounting sense of the term, it is not necessary to have title (a legally enforceable ownership right) to an asset. An asset may be recognized as long as

880-625: Is called an asset heavy company. On the other hand, a company which operates with very few to no assets is called a light asset model. Sectors like manufacturing, medical, engineering and chemical comprise heavy asset model businesses, whereas digital businesses like AirBNB , Uber , Zomato etc. operate as light asset model businesses. Intangible assets lack physical substance and usually are very hard to evaluate. They include patents , copyrights , franchises & licenses , goodwill , trademarks , trade names , etc. These assets are (according to US GAAP) amortized to expense over 5 to 40 years with

935-592: Is described below. The EJV Law is between a Chinese partner and a foreign company. It is incorporated in both Chinese (official) and in English (with equal validity), with limited liability. Prior to China's entry into WTO – and thus the WFOEs – EJVs predominated. In the EJV mode, the partners share profits, losses, and risk in equal proportion to their respective contributions to the venture's registered capital. These escalate upwardly in

990-465: Is done in parallel with other activities in forming a JV. Though dealt with briefly for a shareholders' agreement , some issues must be dealt with here as a preamble to the discussion that follows. There are also many issues which are not in the Articles when a company starts up or never ever present. Also, a JV may elect to stay as a JV alone in a "quasi partnership" to avoid any nonessential disclosure to

1045-532: Is often used and refers to the total of current assets less the total of current liabilities . Often referred to simply as "investments". Long-term investments are to be held for many years and are not intended to be disposed of in the near future. This group usually consists of three types of investments : Different forms of insurance may also be treated as long-term investments. Also referred to as PP&E (property, plant and equipment), these are purchased for continued and long-term use to earn profit in

1100-514: Is the Hemlock Semiconductor Corporation . It is one of the world's largest producers of high-purity polycrystalline silicon, which is sold in varying purity grades for use in both semiconductor silicon wafer manufacture and photovoltaics applications as solar cells. On November 13, 2014, The Dow Chemical Company's former CEO Andrew N. Liveris revealed in a presentation to investors that Corning Incorporated intended to exit

1155-464: Is what will happen if the firm is dissolved, if one of the partners dies, or if the firm is sold. Often, the most successful JVs are those with 50:50 partnership with each party having the same number of directors but rotating control over the firm, or rights to appoint the Chairperson and Vice-chair of the company. Sometimes a party may give a separate trusted person to vote in its place proxy vote of

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1210-505: Is within his total control. WFOEs are typically limited liability enterprises. Like with EJVs, but the liability of the directors, managers, advisers, and suppliers depends on the rules which govern the Departments or Ministries which control product liability, worker safety or environmental protection. An advantage the WFOE enjoys over its alternates is enhanced protection of its know-how but

1265-695: The FDA issued a statement indicating that women with breast implants have a "very low but increased risk" of getting a rare form of cancer called anaplastic large-cell lymphoma (ALCL). The cancer is associated with nine deaths, the FDA said. These findings have caused an uptick in breast implant removal surgeries. Joint venture A joint venture ( JV ) is a business entity created by two or more parties, generally characterized by shared ownership , shared returns and risks , and shared governance. Companies typically pursue joint ventures for one of four reasons: to access

1320-476: The World Trade Organization (WTO) around 2001 has had profound effects on foreign investment. Not being a JV, they are considered here only in comparison or contrast. To implement WTO commitments, China publishes from time to time updated versions of its "Catalogs Investments" (affecting ventures) prohibited, restricted. The WFOE is a Chinese legal person and has to obey all Chinese laws. As such, it

1375-725: The balance sheet . On the balance sheet, additional sub-classifications are generally required by generally accepted accounting principles (GAAP), which vary from country to country. Assets can be divided into current and non-current (a.k.a. fixed or long-lived). Current assets are generally subclassified as cash and cash equivalents, receivables, inventory, and accruals (such as pre-paid expenses). Non-current assets are generally subclassified as investments (financial instruments), property, plant and equipment, intangible assets (including goodwill) and other assets (such as resources or biological assets). Current assets are cash and others that are expected to be converted to cash or consumed either in

1430-450: The "constitution" of a company in these countries. The articles of association regulate the interaction between shareholders and the directors of a company and can be a lengthy document of up to 700,000 or so pages. It deals with the powers relegated by the stockholders to the directors and those withheld by them, requiring the passing of ordinary resolutions , special resolutions and the holding of Extraordinary General Meetings to bring

1485-456: The DOC data, foreign joint ventures of U.S. companies realized a 5.5 percent average return on assets (ROA), while those companies' wholly owned and controlled affiliates (the vast majority of which are wholly owned) realized a slightly lower 5.2 percent ROA. The same story holds true for investments by foreign companies in the U.S., but the difference is more pronounced. U.S.-based joint ventures realized

1540-529: The Dow Corning online-only distributor Xiameter, including fluids, gels, resins. The range of industries targeted by Dow Corning products spans from electronics and automotive to construction, healthcare and others. In recent years, the company has expanded production of solar cells, particularly through its majority stake in Hemlock Semiconductor Corporation , which accounts for a polysilicon franchise worth over $ 1 billion. In 2011, then-CTO Gregg Zank explained that

1595-626: The Founder at board meetings. Recently, in a major case the Indian Supreme Court has held that Memorandums of Understanding (whose details are not in the articles of association) are "unconstitutional" giving more transparency to undertakings. A JV is not a permanent structure. It can be dissolved when: Joint ventures are risky forms of business partnerships . Literature in business and management has paid attention to different factors of conflict and opportunism in joint ventures, in particular

1650-459: The JV's life, giving the option to the foreign investor, by holding higher equity, obtains a faster rate of return with the concurrent wish of the Chinese partner of a later larger role of maintaining long-term control. The parties in any of the ventures, EJV, CJV or WFOE prepare a feasibility study outlined above. It is a non-binding document – the parties are still free to choose not to proceed with

1705-528: The US) covering know-how and trademarks and supply-of-equipment agreements. The minimum equity is prescribed for investment truncated, where the foreign equity and debt levels are: There are also intermediary levels. The foreign investment in the total project must be at least 25%. No minimum investment is set for the Chinese partner. The timing of investments must be mentioned in the Agreement and failure to invest in

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1760-398: The ability to restrict others' access to the benefit to which the entity is entitled. This accounting definition of assets includes items that are not owned by an enterprise, for example a leased building ( Finance lease ), but excludes employees because, while they have the capacity to generate economic benefits, an employer cannot control an employee. In economics , an asset (economics)

1815-461: The cases, the status of the formed enterprise is that of a legal Chinese person which can hire labor directly as, for example, a Chinese national contactor. The minimum of the capital is registered at various levels of investment. Other differences from the EJV are to be noted: Convenience and flexibility are the characteristics of this type of investment. It is therefore easier to find co-operative partners and to reach an agreement. With changes in

1870-548: The company tries to focus its product development on societal “megatrends” (e.g. energy scarcity and urbanization). Throughout the 1980s and 1990s, class-action lawsuits brought by tens of thousands of plaintiffs claimed that Dow Corning's silicone breast implants caused systemic health problems. The claims first centered on breast cancer and then migrated to a range of autoimmune diseases , including lupus , rheumatoid arthritis and various neurological problems. This led to numerous lawsuits beginning in 1984 and culminating in

1925-618: The death of Mao Zedong in 1976, initiatives in foreign trade began to be applied, and law applicable to foreign direct investment was made clear in 1979, while the first Sino-foreign equity venture took place in 2001. The corpus of the law has improved since then. Companies with foreign partners can carry out manufacturing and sales operations in China and can sell through their own sales network. Foreign-Sino companies have export rights which are not available to wholly Chinese companies, as China desires to import foreign technology by encouraging JVs and

1980-495: The directors' decision to bear. A Certificate of Incorporation or the Articles of Incorporation is a document required to form a corporation in the U.S. (in actuality, the state where it is incorporated) and in countries following the practice. In the US, the "constitution" is a single document. The Articles of Incorporation is again a regulation of the directors by the stock-holders in

2035-447: The exception of goodwill. Websites are treated differently in different countries and may fall under either tangible or intangible assets. Tangible assets are those that have a physical substance, such as currencies , buildings , real estate , vehicles , inventories , equipment , art collections , precious metals , rare-earth metals , Industrial metals, and crops. The physical health of tangible assets deteriorate over time. As

2090-468: The following major ways: In the UK , India , and in many common law countries, a joint-venture (or else a company formed by a group of individuals) must file its memorandum of association with the appropriate authority. This is a statutory document which informs the public of its existence. It may be viewed by the public at the office in which it is filed. Together with the articles of association , it forms

2145-423: The government or the public. Some of the issues in a shareholders' agreement are: There are many features which have to be incorporated into the shareholders' agreement which is quite private to the parties as they start off. Normally, it requires noтуОЧ submission to any authority. The other basic document which must be articulated is the Articles, which is a published document and known to members. This repeats

2200-547: The indicated time, draws a penalty. Co-operative Joint Ventures (CJVs) are permitted under the Sino-Foreign Co-operative Joint Ventures. Co-operative enterprises are also called Contractual Operative Enterprises. The CJVs may have a limited structure or unlimited – therefore, there are two versions. The limited-liability version is similar to the EJVs in status of permissions – the foreign investor provides

2255-527: The influence of parent control structure, ownership change, and volatile environment. Government procurement regulations, such as the Federal Acquisition Regulation (FAR) in the United States, may specify how joint ventures are to be approached as suppliers or confirm that a joint venture or other form of contractor partnering is seen as a "desirable" arrangement for supplying to government. The FAR states that The Government will recognize

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2310-405: The integrity and validity of contractor team arrangements [including joint ventures], provided the arrangements are identified and company relationships are fully disclosed in an offer or, for arrangements entered into after submission of an offer, before the arrangement becomes effective. The Government will not normally require or encourage the dissolution of contractor team arrangements. Under

2365-792: The joint venture of 71 years, citing other priorities. Following the December 11, 2015 announcement that it would merge with DuPont , Dow also announced on the same day that it had reached a deal to acquire Corning's stake in Dow Corning in exchange for $ 4.8 billion in cash and Corning gaining a roughly 40% stake in Hemlock Semiconductor Corporation. Dow Chemical assumed full ownership of Dow Corning on June 1, 2016. The company changed its name to Dow Silicones Corporation in 2018. Dow Corning marketed over 7000 products, including various sealants, adhesives, rubbers, lubricants, silicon oils and solvents. Around 2,100 of these are available through

2420-705: The latest technologies. Under Chinese law, foreign enterprises are divided into several basic categories. Of these, five will be described or mentioned here: three relate to industry and services and two as vehicles for foreign investment. Those five categories of Chinese foreign enterprises are: the Sino-Foreign Equity Joint Ventures (EJVs), Sino-Foreign Co-operative Joint Ventures (CJVs), Wholly Foreign-Owned Enterprises (WFOE), although they do not strictly belong to Joint Ventures, plus foreign investment companies limited by shares (FICLBS), and Investment Companies through Foreign Investors (ICFI). Each category

2475-477: The law, it becomes possible to merge with a Chinese company for a quick start. A foreign investor does not need to set up a new corporation in China. Instead, the investor uses the Chinese partner's business license, under a contractual arrangement. However, under the CJV, the land stays in the possession of the Chinese partner. There is another advantage: the percentage of the CJV owned by each partner can change throughout

2530-402: The majority of funds and technology and the Chinese party provides land, buildings, equipment, etc. However, there are no minimum limits on the foreign partner which allows him to be a minority shareholder. The other format of the CJV is similar to a partnership where the parties jointly incur unlimited liability for the debts of the enterprise with no separate legal person being created. In both

2585-401: The nature of an asset: E17: An asset has the following two essential characteristics: (a) It is a present right (b) The right is to an economic benefit. E18:The combination of those two characteristics allows an entity to obtain the economic benefit and control others' access to the benefit. A present right of an entity to an economic benefit entitles the entity to the economic benefit and

2640-417: The present ability to prevent other parties from directing the use of the economic resource and from obtaining the economic benefits that may flow from it. It follows that, if one party controls an economic resource, no other party controls that resource. The accounting equation is the mathematical structure of the balance sheet . It relates assets, liabilities, and owner's equity : Assets are reported on

2695-471: The project. The feasibility study must cover the fundamental technical and commercial aspects of the project, before the parties can proceed to formalize the necessary legal documentation. The study should contain details referred to earlier under Feasibility Study (submissions by the Chinese partner). There is basic law of the PRC concerning enterprises with sole foreign investment controls, WFOEs. China's entry into

2750-450: The reporting entity controls the rights (economic resource) the asset represents. The essential characteristic of control is the ability to benefit from the asset and prevent other entities from doing likewise. The IFRS conceptual framework explains (CF 4.20 ): An entity controls an economic resource if it has the present ability to direct the use of the economic resource and obtain the economic benefits that may flow from it. Control includes

2805-531: The rules applicable to public procurement in the European Union , public bodies may insist that suppliers intending to provide goods and services through a joint partnership accept joint liability for the execution of the contract. According to a 2003 report of the United Nations Conference on Trade and Development , China was the recipient of US$ 53.5 billion in direct foreign investment, making it

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2860-440: The same proportion as the increase in registered capital. The JV contract accompanied by the articles of association for the EJV are the two most fundamental legal documents of the project. The Articles mirror many of the provisions of the JV contract. In case of conflict the JV document has precedence. These documents are prepared at the same time as the feasibility report. There are also the ancillary documents (termed "offsets" in

2915-435: The shareholders agreement as to the number of directors each founder can appoint to the board of directors; whether the board controls or the founders; the taking of decisions by simple majority (50%+1) of those present or a 51% or 75% majority with all directors present (their alternates/ proxy ); the deployment of funds of the firm; extent of debt; the proportion of profit that can be declared as dividends; etc. Also significant

2970-412: The shareholders, including debt, is equal to the number of shares purchased by each partner. Asset In financial accounting , an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value . Assets represent value of ownership that can be converted into cash (although cash itself

3025-426: The world's largest recipient of direct foreign investment for the first time, to exceed the US. Also, it approved the establishment of nearly 500,000 foreign-investment enterprises. The US had 45,000 projects by 2004 with an in-place investment of over 48 billion. Until recently, no guidelines existed on how foreign investment was to be handled due to the restrictive nature of China toward foreign investors. Following

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