Risk And Solution Analysis Of China Enterprises' Outward Foreing Direct Investment

By analyzing the operational risk, political and legal risk and social risk encountered by China's enterprises in the process of foreign direct investment and the problems underlying the enterprises' risk prevention, this paper provides solutions for the risk prevention and advice for the government. Problems exist in the prevention of risks in China enterprises' FDI, such as the vague investment strategy and market positioning, incomplete survey before investment, imperfect corporate governance structure, choosing wrong agencies, and poor public relation management. Solutions for enterprises to solve these problems and prevent FDI risks include: preventing blind investment by setting rational FDI strategy, perfecting corporate governance structure and strengthening finance management to prevent operational risk, understanding the political and legal environment abroad by conducting due diligence and employing agencies, strengthening public relations management to prevent political and legal risk, and fulfilling social responsibility to prevent risks generated from the different social and culture habits and ideas abroad. Additionally, the government is advised to exert the economic diplomacy function to serve the enterprises' FDI, the related administrations are advised to adopt ex post regulation to facilitate enterprises' FDI, the policy financial institutions are advised to monitor the enterprises' FDI risks across the investment, and finally, the homeland agencies should be adopted to serve the enterprises' FDI.