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What are the risks attached to investing from abroad into China?
What are the best ways to minimize these risks?
1. Policy Risk
Establish close relations with government officials.
Because the China government plays an important role in influencing market movement and administering foreign investments, a strong government relationship remains an important factor to do business successfully in China. Fewer hiccups may be met during paperwork applications or achieving local authorization if a strong relationship with government officials is in place. Building strong relationships with government can mitigate policy risks.
2. Laws and Regulations Risk
3. Market Risk
4. Operation Risk
Nurture sound business relationships
Guanxi (relationship) is an important element in achieving successful business in China. Top management must learn to nurture close relationships with their local counterparts. This not only helps them to understand the Chinese domestic market, but also creates avenues for help in times of trouble or in need of assistance. Building strong relationships with business partners can aid in mitigating strategic and operational risks.
5. Financial Risk