A China Joint Venture Is Not Off OEM Books

Some electronics OEM company boards will not want to add another China factory on the 10-K, yet they need additional capacity. What's common is to create a joint venture.

When the OEM does consolidate, the profit and loss, the balance sheet, and the cash flow statement each remain with the OEM. When the OEM does not consolidate, the OEM still carries an equity investment, guarantees, consigned inventory and tooling, plus the minimum order quantity and payment.

Equity-method income and related-party purchasing activity are still part of a China relationship, but this structure changes how the OEM conveys the EMS provider relationship to customers and in press releases.

Full article at ventureoutsource.com: Joint venture (JV) contract electronics manufacturing when OEM does not consolidate China