Since China was open to the outside world, its trade forms have become much more flexible. One of these commonly used forms is co-production. Would you please do a bit explanation of it, Mr. Walker?
Well, under this arrangement two parties cooperate to manufacture a product or a category of products, for example, machine tools for export. Each party produces and supplies a part of the components and parts ; one party is a Chinese enterprise, the other, an overseas firm. Most probably, the foreign counterpart contributes technology and equipment, and sometimes, parts and components, while the Chinese enterprises factory building, labor and other resources to the cooperative production. They join hands and fulfill orders together by an agreement or a contract.
I suppose that the assembling of these components and parts, particularly the marketing of the finished products should take place in China.
Not necessarily. It depends on the contract stipulations. They may be marketed in the foreign country where the other party is located, or even in a third country.
I think the principle of co-production is to expand export trade. It's a reciprocal business, isn't it?
Yes, you are right. Either party is not well-equipped to produce the final products single-handedly, but they can enter into an agreement. In such case, each side contributes different resources to make the manufacture of a certain product or a category of products possible.