Chinese Enterprises’Foreign Direct Investment Behavior And Risk Prevention

From the1990s with the encouragement of "Gonging out", Chinese enterprises gradually went out of the country. With the further development of economic globalization China joined WTO, also, many Chinese enterprises have begun to foreign investment and joined a highly competitive international market.Chinese enterprises overseas investment drive domestic equipment,machines and foreign circulation of capital,promote the rapid growth of domestic economy,effectively alleviate the shortage of domestic resources,while improving the international competitiveness of domestic enterprises. However, accompanied with the "Going out" enterprise, there are not only benefits but also a number of risks. In recent years, the volatile situation of the international community, coupled with some countries where politically turbulent and war frequently happen, foreign investment enterprises’ are facing many risks. In addition, by the depreciation of the dollar and the US subprime mortage crisis accompanied with the world economy, international trade friction is intensifying, the political and economic conflicts of interest between countries increased, which aggravates the risk of overseas investment, as well as the instability of the operating environment. In this case, the Chinese enterprises conducting overseas investment must increase awareness of risk management, fully understand that companies may encounter varieties of risks, establish a risks control mechanism, make plans to face the risk in advance and take timely and effective prevention measures to reduce the loss of risk as much as possible. Also, the Libyan war, which causes irreparable damage to our business, make our realize the political risk of overseas investment.At present, the enthusiasm of Chinese overseas investment remains unabated, statistics provided by commerce Department show that from2002to2010, Chinese overseas investment increased by an average of52%annually. During the eleventh "Fire year", Chinese overseas investment increased by35%, four times the amount of that in the tenth one. Although, our overseas investment has been increasing, the foreign direct investment of Chinese enterprises is still faced with some limitations and constraints of the host government. In order to curb the country’s economic development, some western counties maliciously impede or refuse overseas investment and acquisitions of Chinese companies. What’s worse, they spread the theory of china threat and even regard china’s peaceful development as aggression and war. This undoubtedly causes many obstacles and uncertain factors of risks. Attention has been paid to prevent economic risks in overseas investment. However, in the host country Chinese enterprises do not attach much importance on political risks and take effective measures to against it, resulting in a serious loss. Therefore, this article will be combination with the situation of Chinese enterprises and focus on the analysis of political risks, as well as Chinese factors that impact on foreign investment, and take from three levels in response to the political risks.