31 January 2024 post by Babaoriley:  "But they need a partner that will mass produce the IO and other products in other than the Far East."

My mistake, Babaoriley, I interpreted "other than the Far East" to mean China and, of course, "other than the Far East" is a much broader statement than limiting the discussion only to China.  FJ has already pointed out that Singapore may well be a great partner to expand an already existing aliance with POET.

Going back to China for just a minute, I completely missed the Off Topic post way back on 30 November 2023 by sugarmaple relevant to the problems of non Chinese companies doing business in China as a JV.  I just now reviewed that post and I thought that the article posted by sugarmaple brought up some very interesting, if not salient, points to consider, at least in a cautionary way since POET already has an extant JV in Fujian Province, China.

Below is just the beginning of the post sugarmaple made on 30 November 2023 on the Off Topic.  I am reposting this small portion just as a reference to the sort of things that are part of the "deal" when non Chinese companies enter into a JV arrangement in China.  Sugarmaple's article goes into much more detail than just this small sample, see the 30 November post by sugarmaple in the Off Topic forum for the whole enchilada.

Talking out of both sides of my mouth right now, I am glad we have the arrangement with Sanan Optoelectronics, but it doesn't cost anything to be aware of the possibilites, good and bad.

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The China Joint Venture Squeeze Out

Chinese companies interested in a joint ventures often claim they want to share “the upside” with you when the joint venture goes public.

Reality check — that’s probably not going to happen. Instead, your Chinese business partner is likely going to try to force you out of the joint venture once they decide they’re done with you. We call this the “China Going Public Freeze-Out.”

Our China lawyers tell every foreign partner in a Chinese JV not to transfer their ownership interest in the joint venture unless and until the money you are owed for those shares is in your home country bank account in your country’s currency. When we give this advice to our clients, they almost always reply that the Chinese side has told them that advance payment for the transfer of ownership is impossible.

The problem is that the process of transferring money from China is more complex than many companies expect. Here’s what I mean. First, the Chinese side must convert their RMB to the foreign partner’s currency and then transmit that money through a PRC foreign exchange bank. The Chinese bank will then work with the local tax and company registration authorities and report that the conversion and transfer is impossible until after all of the following are complete:

1. Conversion of the entity from a China JV to a wholly Chinese-owned entity. This process requires approval from local authorities, an independent appraisal of the entity’s values and an audit of all the company books.
2. Transfer of the ownership interest to Chinese persons.
3. Payment of all back taxes and fees of the JV entity.
4. Payment of a substantial tax on the gain realized by the foreign partner.
5. Payment of an additional withholding tax on the overseas payment.

As you can probably tell, this is a time-consuming procedure. To avoid the long process, the Chinese side will often claim to be unable to transmit its payments out of China. It will then push for the foreign party to open a Chinese bank account where it can deposit the payment funds in RMB. It then becomes the foreign partner’s responsibility to convert the RMB to dollars and then  transmit the funds from China to its home country.

The outcomes of this procedure are also uncertain. The amount of taxes and other fees you’ll be liable for depends entirely on the unconstrained decision of the local Chinese authorities. And there’s no certainty that the conversion and payment of funds to the foreign company will be approved under commercially reasonable conditions. It almost never is.

Essentially, what you are facing is not a good faith buyout. What you are facing is a joint venture squeeze out. In this scenario, the Chinese side is forcing you — the foreign party — out of the JV without providing fair compensation.

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Thanks, sugarmaple.

Okiedo