Managing China Risks

At the moment, China is one of the fastest developing markets in the world. With the 2020 strategic plan, China intends to triple its GDP per capita between 2005 and 2020. China is also transforming from foreign direct investment promotion and export towards technology upgrading and higher productivity growth in manufacturing. The government supports by giving a 4 trillion stimulus package, which is used for example in construction projects, environmental development, health care, education and rehabilitating areas.

There are several issues companies need to take in to notice when entering the China.

Intellectual Property Right risks are an issue in China. Strategic IPR planning, registering all your trademarks, copyrights, software rights in both English and Chinese are some of the crucial IPR issues you should take in notice, before entering the Chinese markets.

It is also important that the location is suitable and beneficial for your organization. Choosing the place wrong, may result to entry termination and wasted investment. The location can be narrowed down by asking questions like what is your industry, where is your market, where are your customers, where is the competition, etc.

There will be also business architecture risks, which is all about what kind of legal presence your organizations wants in China. There are options, for example FICE Trading Companies, Representative Office, Trading Company and Agents. Each one of these options has their own benefits and disadvantages.

Operational risks involve structuring the operations in China, which may be anything from, product sales from Finland to manufacturing or outsourcing in China. Common risks in this area involve payment, contract, sourcing, quality control and logistic risks.

China is investing and pushing for all around development, and within this transformation, China is seeking the best technology, services and knowledge from foreign countries. By using professionals with long term China business and culture know-how, good local contacts, as well as required skills in legal management you can minimize the risks in entering to Chinese market.