The Risks of Doing Business in China
The Risks of Doing Business in China
Despite recent measures to curb corruption, foreign investors doing business in China must remain vigilant.
Tuesday, June 04, 2013 , By Jim Barratt and Jimmy Ko China's economy is the second-largest in the world and continues to grow at an astonishing rate. Just recently, in fact, the Asian Development Bank forecasted that China's economy will grow by 8.2% this year. However, while economic growth brings business opportunities to all investors, continued widespread corruption in China has affected its government's legitimacy in maintaining prosperity in the region and can bring a multitude of risks to financial services companies that are doing business there.
With China's recent transition to new leadership complete, it has been interesting to observe the ruling party's heightened focus on tackling corruption. Under China's new president, Xi Jinping, it has conducted a visible anti-corruption drive and imposed austerity measures in an effort to curb the display of wealth by government officials and generate goodwill among the Chinese population.
While critics say that the recent measures target only the most conspicuous displays of wealth by government officials, the anti-corruption drive has already netted dozens of officials. Moreover, some perceive that the recent election of Wang Qishan as the new head of China's anti-graft body, the Central Commission for Discipline Inspection (CCDI), signals that the financial sector could be a focus in China's anti-corruption efforts. (Mr. Wang possesses a strong background in finance and economics.)
Whether recent measures will prove to be successful in curbing government corruption remains to be seen, as we are all aware that it has been a systemic issue for a long time. For example, the China Securities Regulatory Commission (CSRC), the equivalent of the U.S. Securities and Exchange Commission (SEC), is still perceived as corrupt, despite the arrest and sentencing of a
Despite recent measures to curb corruption, foreign investors doing business in China must remain vigilant.
Tuesday, June 04, 2013 , By Jim Barratt and Jimmy Ko China's economy is the second-largest in the world and continues to grow at an astonishing rate. Just recently, in fact, the Asian Development Bank forecasted that China's economy will grow by 8.2% this year. However, while economic growth brings business opportunities to all investors, continued widespread corruption in China has affected its government's legitimacy in maintaining prosperity in the region and can bring a multitude of risks to financial services companies that are doing business there.
With China's recent transition to new leadership complete, it has been interesting to observe the ruling party's heightened focus on tackling corruption. Under China's new president, Xi Jinping, it has conducted a visible anti-corruption drive and imposed austerity measures in an effort to curb the display of wealth by government officials and generate goodwill among the Chinese population.
While critics say that the recent measures target only the most conspicuous displays of wealth by government officials, the anti-corruption drive has already netted dozens of officials. Moreover, some perceive that the recent election of Wang Qishan as the new head of China's anti-graft body, the Central Commission for Discipline Inspection (CCDI), signals that the financial sector could be a focus in China's anti-corruption efforts. (Mr. Wang possesses a strong background in finance and economics.)
Whether recent measures will prove to be successful in curbing government corruption remains to be seen, as we are all aware that it has been a systemic issue for a long time. For example, the China Securities Regulatory Commission (CSRC), the equivalent of the U.S. Securities and Exchange Commission (SEC), is still perceived as corrupt, despite the arrest and sentencing of a