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A. General Situation:
1. Purpose of Joint Venture: In order to adapt to the competitive complexion combined by both opportunities and challenges faced by domestic garment industry after China joining WTO, two parties of the joint venture aim to fully utilize the advantages of two parties to make up each other, make use of internationally advanced and suitable manufacture techniques, use domestic and overseas scientific management methods for reference, make use of available distribution channels of two parties, enhance the levels of products, enlarge the export of products and increase foreign exchange earnings, thereby gaining legal economic benefit and social benefit satisfied by two parties of the joint venture.

2.Appellation of the Joint Venture: Jiangsu Sainty OXFORD Clothing Co. LTD. Address of the Joint Venture: Economic Development District, Jiangdu City, Jiangsu

3.Scope of Operation: Manufacturing and selling all kinds of garment products

4.Scale of Production: Annual output is 2,200,000 shirts and other kinds of clothes (suit), 100% for export.

5.Elementary Situation of Each Party of the Joint Venture:
(1)Party A: Jiangsu Sainty Corporation
(2)Party B: OXFORD(International)Co. Ltd

6. Investment Situation of the Joint Venture:
(1)Total investment of the project is $1,400,000.
(2)The registration capital of the joint venture increased by this project amounts to $1,200,000.
(3)Proportion and Methods of Contribution 
Party A: Having contributed $612,000, accounting for 51% of the increased registration capital, contributed in cash and RMB;
Party B: Having contributed $588,000, accounting for 49% of the increased registration capital, contributed in drafts and dollars.

7. Term of the joint venture is 10 years.

8. Distribution of Profit: Each of two parties shares profit and bears risks according to the respective contribution proportion in the registration capital.

B. Analysis of Markets and Arrangements of Production:

1. Analysis of Markets: After China joining WTO, the market of China’s Garment Industry has a more prosperous future; however, the competition of garment exports is also fiercer and fiercer. Under this competitive situation of markets combined by both challenges and opportunities, the issue of how to close affiliate production with international markets and timely holding dynamic of the market to neatly cope with by advanced techniques and management methods in compliance with nature distribution networks and channels will be key to the exist and development of garment Industry in foreign trading. Party A of the joint venture is the company in the stock market dealing with exportation for several years and equipped with successful experience of investing in production entities while party B is an U.S. company in US Stock market mainly on sale of garment with an annual sales volume reaching more than 0.85 billion dollars and the joint venture is the first joint venture established by party B in China. Both two parties have extensive distribution channels in both domestic and overseas markets together with good reputation, thus it is really feasible for them to operate a garment joint venture.

2. Arrangements of Production Capability and Evaluation of Sale Prices: The production capability of this project is 2,200,000 (suit) of annual output of shirts and other kinds of clothes with the processing fee of RMB 19.09 per piece.

3. Scheme of Sale: 100% of the shirts manufactured by the joint venture are exported overseas and the businesses of arrangements will be in the charged of party A.

C. Analyses of Production Conditions:

1. Materials and auxiliary materials needed by the production of clothes are the ones with good quality and competitive prices that may be obtained through current channels of two sides from both domestic and overseas organizations, therefore in favor of producing clothes with high quality and favorable prices as well as possessing competitiveness in international markets.

2. The workshop of 6000 kilo meters for manufacturing is rent by the joint venture to Jiangsu Sainty Jiangdu Garment Co. LTD

3. The provision of water, electricity and environment together with safety of labor needed by the joint venture is responsible by Jiangsu Sainty Jiangdu Garment Co. LTD

4. The production staff of first period and the organizational arrangement of facilities are responsible by party A.

D. Comprehensive Analyses of Economics:

1. Analyses of Sale of Products: an annual output of 2,200,000 pieces of shirts with an average processing fee of 19.09 yuan per piece (price excluded taxes is 19.09/1.17=16.32 yuan per piece) and an annual sales volume of 42,000,000 yuan.

2. Analyses of Cost and Profit: The total variable costs of 2,200,000 pieces of shirts are 38,903,600 yuan, accounting for 92.6% of sales volume, out of which direct costs are 29,783,400 yuan and operation costs are 9,120,200 yuan. The annual profit is 3,096,400 yuan, accounting for 7.4% of sales volume.
After puting into production, and if calculated by a 10-year production period, in the first 5 years we can enjoy the policy that income taxes of two years are exempted and that of three years are reduced by 50%; and in the latter 5 years we shall pay tax by 33% of tax rate annually, thus the total income taxes that we shall pay for the 10 years are 6,641,800 yuan, and distributive profits are 24,322,200 yuan.

3. Comprehensive Analyses:
(1)Static Analyses
Profit Ratio from Investment=Annual Average Profit After Taxes/Total Investment×100%=3,096,400 yuan÷11,620,000 yuan×100%=26.65%
Profit Ratio of Capital Rights=Annual Average Profit After Taxes/Registration Capital×100%=3,096,400 yuan÷9,960,000 yuan×100%=31。08%
(2)Dynamic Analyses
Net Present Value: Calculated as a 10-year production period after being put into production, the net present value of this project =Total Present Value of Future Reward-Total Investment=24,322,200-11,620,000=12,702,200 yuan
Net present value is a quite big positive number, so the scheme is feasible.
(3)Payback Period
Payback Period=Total Investment/Annual Net Cash Flow=11,620,000 RMB/2,432,200 RMB=4.78years
Payback period is within 5 years.

E. Sources of members for the project:
The project includes totally 680 people; the organization of labor is arranged as follows: General Manager：1 Assistant General Managers：3 Managerial personnel：16 Technical personnel：24 Machine and electricity maintainer：6 Production personnel：605 Cleaners：6

F. Overall Evaluations:

1. From the aspect of the enterprise, through the implementation of this project, the company could make use of foreign investment, introduce advanced techniques and management experiences, increase the market competitiveness of the products and fully utilize the good market credit and reputation as well as distribution channels, scale up the exportation, with a common aim to enable the company firmly grasp the market chance in advance after China joining WTO.

2. From the aspect of social benefit, the products can be quickly exported to the international market through the implementation of this project, earn big amount of foreign currency; meanwhile, it can solve the problem of employment of superabundant labors increase the income of the mass and enhance the level of living. 
The well cooperation between Jiangsu Sainty and OXFORD International has fully indicated that: the Chinese and U.S. companies can absolutely reach the win-win result based on the principles of seeking common grounds while reserving differences and making use of advantages to complement the other, enhancing mutual understanding, strengthening the communication, and making healthy interaction.

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