Opportunities and risks of doing business in China
Introduction
The liberalisation of China’s economy and the country’s emergence as a major global economic power are among some of the most significant world developments of the past decade. However, China currently remains a relatively poor country with per capita income only a fraction of that enjoyed by neighbours such as South Korea. It will also have to overcome huge problems if it is to become a global superpower. These include weak institutions, a rickety financial system, an inadequate legal framework, massive environmental degradation and a huge army of unemployed and underemployed migrant workers having little stake in society.
Yet, few major international firms can afford to ignore China’s huge economic potential. The country already has a prosperous, 100 million-strong middle class, and is rapidly becoming the workshop of the world as companies in developed countries outsource production to factories in China. It has also become a much more attractive investment destination since its accession to the World Trade Organisation in 2001 and successful bid to host the 2008 Olympic Games. Over US$60 billion of Foreign Direct Investment flowed into the country in 2005 alone; meanwhile, China’s foreign trade surged to a record US$1.42 trillion and the country became the world’s third biggest trading power after the US and Germany.
In 2004 Insight collaborated with Morley Fund Management to host a series of seminars, involving companies, investors and specialists, to facilitate debate on how foreign companies can operate successfully and responsibly in China. The aim of the seminars was to explore emerging best practice for managing some of the key risks facing foreign companies operating in or sourcing from China.
We published a summary of the issues discussed in a paper, entitled “China: Opportunities and Risks for Foreign Companies”. This cited several examples of European companies that have realised a tangible benefit from putting in place effective risk management systems in their Chinese operations or supply chains. The report concluded with a series of practical recommendations for companies to consider when entering China, relating to issues such as the weak legal and banking system, operational considerations, and environmental, human rights and labour standards issues.
^^ Back to top
Publications
Reports
"China: Opportunities and Risks for Foreign Companies"
Briefings
"Insight and Morley release joint report on business risks in China" Page 7
"Promoting responsible business in China. Seminar 3: managing labour issues in the supply chain" Page 3
"Promoting responsible business in China: Insight and Morley launch 2004 seminar series" Page 14
|
