Study On Risk Influencing Factors Of Chinese Enterprises’ Overseas Forestry Investment

With the strengthening of China’s comprehensive national strength and the carrying out of the "going out" strategy, the scale of foreign direct investment continues to expand, achieving 13 consecutive years of growth. Industrialization and urbanization accelerate the rapid expansion of domestic demand for natural resources, and especially for forest products. In 2014, the domestic volume of supply in Chinese market of forest products is 0.28 billion steres, while the volume of demand 0.539 billion, and the gap between them is 0.259 billion. Domestic supply of forest products has decreased while the dependence of foreign trade in forest products increases to 50% because of the shortage, low per capita share, maldistribution and undergrade of forest resources in China and natural forest conservation program established by Chinese government. The import of timber is hindered, for countries around the world have issued restrictions and prohibition on the export of logs out of the protection of the ecological environment. Under such background, the direct investment of overseas forest resources will help to narrow the gap of domestic timber supply and demand and promote the sustainable development of economy.In recent years overseas forest resources investment by Chinese forestry enterprises keep increasing. The characteristics of overseas investment are as follows:with private enterprises as its main force, overall investment smaller, regional investment centralized, mainly investment being in forest harvesting and wood processing. But it is still in the initial stage and the investment risk is rather high. In the investment process forestry enterprises are facing so many risky factors as political policies, economic financial, sociocultural, forest resources, and management. Therefore, the recognition, early warning and prevention of investment risk should be strengthened, which is also the focus of this article.48 countries rich in forest resources and having close trade contacts with Chinese forestry are chosen as samples here. The influence factors of overseas investment in forest resources are analyzed by analytic approach of principal components and country risk is given quantitative evaluation. From the empirical results, it can be shown that the resources, monetary and political factors have a significant impact on China’s overseas investment in forest resources. Forestry investors prefer to invest in developing countries with high risk, because the advantages of their resources and loose market access make investors ignore their political risk to a certain extent. In addition, forestry enterprises choose developed countries with excellent political and economic environment and potential sustainable development of forest resources as their investment destination. In the end, from the aspects of the self-development of enterprises, support of financial institutions and the macroscopic guidance of the state, the countermeasures and advices of risk prevention in terms of China’s overseas investment in forest resources are suggested in this article.