Threats linked to the establishment in China

Threats linked to the establishment in China

China's role continues to grow in international trade. Despite a decline in foreign investment of about 15% since the beginning of 2009 linked to the crisis. However, the country is far from free from the problems that businesses have to deal with. To cite only the most important, let us mention the social and economic risks. As a business, you should be aware of these risks before setting up in China. Find out more about it here.

Social risk

China hosts most multinationals that have set up factories to take advantage of a plethora of cheap labor and advantageous tax conditions. You can look what i found here. The Chinese authorities have opted for mass production exported to developed countries. However, the current crisis, in its consumer crisis component, particularly affects China. 

Most global economic experts agree that at less than 8% growth, the Chinese economy is in jeopardy and social unrest highly likely. The nationalist risk cannot be ruled out. The Chinese have still not forgotten the humiliation of unequal treaties. In the current context, it is not excluded that the authorities will again use the nationalism of the populations. However, they will only be able to do so with caution, otherwise they will no longer have complete control over the phenomenon.

Economic risk

If China is still largely profitable for multinationals, the latter have an erroneous perception of their new environment. This leads to errors both in personnel management and in relations with the authorities. This leads to misunderstandings that can be detrimental to the growth of a business. Analysts consider that about 80% of counterfeit products come from China and the United States. 

They estimate that the value of counterfeit American products represents between 19 and 24 billion dollars, for a loss exceeding 1.8 billion dollars. Despite the agreements made with the United States and the European Union, the companies have decided to overcome the Chinese shortcomings themselves by creating pressure groups and sharing information. However, these measures have for the moment only a very limited impact on the production of counterfeits.

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