Forms of Business Ownership 企业产权形式

☆How many Chinese and foreign companies can you name ☆How many Chinese and foreign companies can you name? ☆What is your most admired corporation? ☆What company do you wish to work for?

The following are some of China’s power brands The following are some of China’s power brands. Can you name their Chinese version? Gome Electrical Appliances Haier Group Hangzhou Wahaha Group Co. TCL Corp. Lenovo Group ltd. Panda Electronics Group Company, Ltd. Huawei technologies co. The People’s Insurance Company of China (PICC)

why do you want to set up a business?

People set up a business because: they want to work for themselves (independence) they have been made redundant from their last job they cannot find another job they want to achieve something for themselves (self actualization) it is a natural progression from a hobby or interest

An entrepreneur is someone who: combines resources identifies opportunities takes risks makes decisions

Business formats: Sole Proprietorships Partnerships Corporations Limited Liability companies Joint Venture Franchises

Sole Proprietorship 个人企业 An organization that is owned, and usually managed, by one person is called a Sole Proprietorship. 个人企业即独资经营企业，是由一名出资者单独出资并从事经营管理的企业。

Sole Proprietorship Advantages Can make decisions quickly Keeps all the rewards Easy to set up Privacy of business affairs Disadvantages Limited sources of finance (e. g. own funds) Unlimited liability, i.e. can lose personal assets Often has limited managerial skills No one to share workload and ideas with

Partnerships A partnership is a legal relationship between two persons carrying on a profit-motivated business. 合伙企业是由两人以上组成，在合伙人之间订立合伙协议，共同出资、合伙经营、共享收益、共担风险，并对合伙企业债务承担无限连带责任的营利性组织。

Three key elements of partnership: Common ownership Shared profits and losses The right to participate in managing the operations of the business

partnership Advantages Disadvantages Share resources / ideas Can cover for each other More sources of finance than sole trader Partners can specialize Disadvantages Usually unlimited liability Limited sources of finance Profits must be shared between partners Slower decision making than sole trader

Corporations 公司 The corporation is a legal entity（法人实体）, allowed by legislation, which permits a group of people, as shareholders (for-profit companies) or members (non-profit companies), to create an organization, which can then focus on pursuing set objectives, and empowered（授权与） with legal rights which are usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money.

公司是依公司法的规定设立的法人组织，具有独立的法人资格，有权以自己的名义拥有财产、享有权利和承担义务。

Corporations Advantages Limited liability Skilled management team Transfer of ownership Greater capital base Stability Disadvantages Multiple taxation Difficulty and expense of starting Government involvement Lack of secrecy Lack of personal interest Credit limitations

Limited Liability Companies 有限责任公司 A Limited liability Company is a type of business ownership combining several features of corporation and partnership structures. 有限责任公司是新型的企业组织，它集合了公司的一些特征和合伙企业的组织结构，股东以其出资额为限对公司承担责任，公司以其全部资产对公司的债务承担责任。

Limited liability Companies Advantages Limited liability Flexible profit distribution No minutes Flow through taxation Disadvantages Limited life Going public（上市） Added complexity

Joint Venture 合资企业 A joint venture is the pooling of resources and expertise by two or more businesses, typically from different areas or countries to achieve a particular goal. The risks and rewards of the enterprise are also shared. 合资企业是只有两个或两个以上属于不同国家（或地区）的公司、企业或其他经济组织以合资方式组成的经济实体。

Advantages Access to new markets and distribution networks Increased capacity The sharing of risks with a partner Access to specialized staff and technology

Disadvantages Unclear objectives and not enough communication An imbalance in levels of expertise, investment or assets by the different partners Different cultures and management styles result in poor integration and co-operation between the partners Not sufficient leadership and support in the early stages.

Franchises A franchise is the right to use a business name and sell products or services, usually in a specific geographical territory. 特许经营是指特许者将自己所拥有的商标、商号、产品、专利和专有技术、经营模式等以特许经营合同的形式授予被特许者使用；被特许者按合同规定在特许者同意的业务模式下从事经营活动，并向特许者支付相应费用。由于特许企业的存在形式具有连锁经营、统一形象、统一管理等基本特征，因此也称之为特许连锁。

Advantages Existing, established product; already known, therefore, cheaper market research and promotional costs May receive help and training from franchisor Can share marketing costs, research findings, new product development cost Lower set up cost

Disadvantage Less freedom Products and services cannot be changed Expensive initial franchises A large share of profits, referred to as Royalty payments, is required by franchiser.

Group discussion Which form of business ownership do you want to choose if you want to start your business upon graduation? Why?

To achieve the finance to set up a business, individuals often require a business plan.

Business Plan A report showing of the business; often used to attract finance from investors. Businesses which put the time and effort into their business plans, thinking about the competition and the financial consequences of their proposals, are more likely to be successful than those which do not.

Main elements of business plan A description of the business A statement of its aims A market plan A list of key personnel A projected balance sheet A projected cash flow statement details of the finance required

After-class research What is your favorite company in the business world? If time permits, find more information about it and think about what elements contribute to its today’s success?