There are two forms of a JV: Equity JV (EJV) and Cooperative JV (CJV). The EJV has legal-person status and can enter into contracts. Each partner contributes cash and/or combination of buildings, equipment, IPR, land-use rights etc. which are all given values and used to determine the venture's equity split. The CJV differs somewhat, in which each party cooperates as a separate legal entity and bears its own liabilities. The two firms entering into a CJV also have the option of forming a limited liability entity with legal-person status, similar to that of an EJV. Although the approval process for establishing CJV's and EJV's is the same, the primary difference between the two vehicles is that the CJV's profits and assets are shared as specified in the contract, not necessarily according to the percentage of each partner's share of total investment.

The first step in undertaking a joint venture is finding a Chinese partner. In theory this is a simple process. The challenge lies in resolving contractual issues (such as the terms of investment and co-operation, distribution of profits or products, sharing of risks and losses, method of management, and ownership of properties) with a Chinese partner. Conditions for setting up the JV are then agreed upon by both parties. Officially negotiations begin with drafting of the Letter of Intent (LOI.) The letter usually expresses the fact that both parties are interested in a joint venture relationship and outlines the framework for future discussions. The Chinese partner uses the LOI to alert the relevant government bureaus that negotiations are underway. The early involvement and support of the appropriate government officials is critical for final approval.