The Analysis Of Effect Factors Related To Investment Risk Of Biological Industry

Biological products are called life products. Biological products industry is at the beginning of rapid development, which will gradually become one of the leading industries in the world. Biological product industry moves into a period of fast expansion in China, with an average annual growth rate of more than 25%. Biological products industry has a broad investment prospects. However, there is a higher investment risk in this industry as well. On one hand, the development of biological products is in need of high input, with a long cycle of return. On the other hand, product duplication and low industry concentration are very common, which increased the investment risk. Investment risk is a variable that can not be observed directly, but we could get to know it by seeking its impact factor. This article summarizes the risk factors in the investment of biological products industry, and tries to identify the main ones.This paper introduces the research status, research thinking and technical route first. It then describes the investment environment of biological product industry in China. It also summarizes six risk factors, including project selection risk, agency risk, exit risk, operational risk, financial risk and capital market risk. The characteristics and mechanism of action are introduced. In the empirical part, structural equation model and qualitative response model are employed to identify main risk factor in the investment of biological products industry and analyse the key factor. Structural equation model shows that the main risk factors in biological products industry are project selection risk, agency risk, operational risk, capital market risk. LPM model further identifies the most important risk factors are project selection risk, agency risk, among which project selection risk has the highest correlation coefficient. Logit regression model shows that the project selection risk is directly related to the operation and growth ability of enterprises. According to the results, investors are supposed to focus on project selection risk when investing in biological products industry.