Risk Perceptions Of Chinese And Dutch Investors Operating In The African Market A Comparative Study

This study contributes to the finance research that examines how country-specific investors’ risk perceptions of investments in Africa differ. In this case, risk perceptions of Chinese and Dutch professionals, working on Africa investments for policy banks and institutions in China and the Netherlands respectively, are compared. Existing literature suggests that Chinese and Western investors perceive importance of various risks differently. However, no conclusive research has been performed on Africa specific risk perceptions of Dutch and Chinese investors.By means of a statistical analysis of survey results, I examine how country and project risk perceptions differ between Chinese&Dutch professionals working for financial institutions that invest in Africa. Eighteen Dutch investors and fifteen Chinese investors from four different financial institutions ranked twenty-six risk factors on a Likert type scale. By following a distribution fitting approach, the risk factors were ranked by their level of importance for both samples.The results show that although there are various similarities between both samples’risk perceptions, the ranking of the priority risks is substantially different. Chinese investors perceive political country risks, such as conflicts, government stability and bureaucracy quality, and religious and ethnic tensions as very important. The Dutch investors find the project risks; corporate governance, financial project risks and environmental and social risks most important. Similarities between both samples risk perceptions can be found in the average importance of corruption risk, the high importance of environmental and social risk, and the little importance of a country’s economic and financial risk. This study suggests that based on the similarities in risk perceptions, common grounds can be found for cooperation in the African market.