Research On Risk Prevention System Of Foreign Direct Investment In Developing Countries

Affected by the financial crisis,China’s SMEs are facing the difficulties of the industrial upgrading.Besides,China’s labor costs are increasing,the export market is shrinking,domestic competition is aggravating, technological capacity is backward,so it’s urgent to go out to seek opportunities for SMEs.With the country’s requirements for energy, resources, technology, international voice and other strategic,many policies and regulations have been introduced to promote enterprises’ integration in the global market.At the present,facing China’s trade deficit and the increasing foreign exchange reserves,foreign direct investment can be a good use of China’s huge foreign exchange reserves,so China will continue to encourage and support China’s enterprises’ foreign direct investment in the future.At the same time,we also see that the pace of "going out"of China’s SMEs is not easy.Twelfth Five Year Plan" clearly puts forward to improve the income of foreign companies,which also shows that our corporate earnings in foreign direct investment process are lower,especially the investments in developing countries are lowest.A series of economic risks about the exchange rate,interest rate,inflation have been increasing in developing countries.Besides,the conflicts about energy resources and interests are frequent,such as the Afghan civil war,Syria,Thailand conflict,and some countries’"anti-China sentiment "is very high.In addition,trade barriers and technical barriers have brought greater uncertainty to China’s SMEs. So it is meaningful to research the risk prevention system of the foreign direct investment in developing countries for SMEs.Based on the analysis of the risks of SMEs’ foreign direct investment in developing countries,the paper will construct a risk prevention system for SMEs,then through a case to analyze the implementation and application of the risk prevention system.The paper use the standard analysis,qualitative analysis,case analysis methods to research,and through the case of invest and build factories in Laos of a pharmaceutical companies in Henan,I wish to build a risk prevention system which is strong to apply.The article focuses on the study of risk prevention system,and the difficulty is how to achieve a comprehensive,continuous,systematic process of risk prevention system. Based on this,chapter one introduces the background and significance of the study,innovation,structural arrangements.Second chapter describes the status about the investment and the risk management of China’s SMEs’ foreign direct investment in developing countries,the status of the investment include the investment’s size,mode,region,industry and so on;then will describe the status of the risk management from four aspects:risk management awareness,risk tolerance,risk management,risk prevention means. Chapter three analyzes the risk the SMEs faces from two aspects:the factors of the SMEs themselves,the external environment.In the fourth chapter,the article builds a risk prevention system,which include three subsystem:the risk management subsystem,the risk remedies subsystem,the supoported subsystem,and then will introduce a case Analysis.The fifth chapter will optimize and improve the risk prevention system from strategic objectives, organizational structure,information analysis,construction and improvement of human resources,which bases on the problems of the implementation of the the risk prevention system for SMEs.