Home Business China International Culture��Edu Sci��Tech Sports Life Travel P hotos ��Search China Observer �� Ma Kai: China's economy and macro-control policy �� China's petroleum import dependency to top 50% in 2010 �� How should foreign investors manage risks of policy changes in China? Photos �� "Chocolate car" dazzles Xi'an �� Tokyo International Boat Show displays a "never sinking boat" �� 100,000 people flocked to the Dragon Pond Temple Fair ��Home>>China Observer How should foreign investors manage risks of policy changes in China? www.chinanews.cn 2005-02-16 13:35:10 Chinanews, Feb. 15 - China's macro economic controls in 2004 alarmed some people and industries. However, foreign funded enterprises persisted in following their own judgement and principles of operations, and seized opportunities presented by the macro control policies, thereby obtaining excellent development prospects. There was even optimism that the existing situation of competition among foreign funded enterprises and Chinese funded enterprises could be changed. According to Sun Hongwei, president of Rong International's China office, the scientific development view will dominate the Chinese economy. Guided by this view, the Chinese government will gradually add to its understanding of market behavior, reduce use of administrative measures, and find an effective way of implementing economic policies suitable in the Chinese context and also in line with international standards. Foreign investors should try to understand trends in the Chinese market against this backdrop. As to how foreign investors should manage risks of policy changes in China at a time of economic changes, Sun made several suggestions as follows: Firstly, a number of major foreign investors have their own professional research teams and theories directed at the Chinese market. However, most foreign investors do not have such proprietary resources. Therefore, it would make all the difference for them to have effective and professional advice from an independent consulting firm. They can get advice from independent foreign-funded research institutes, local consulting groups, the investors themselves, and government publications. Secondly, when confronting the policy adjustment and trend of changes, foreign-funded enterprises should gradually develop their ability of forming independent opinions, have a clear understanding of the essence of China's economic policies and rely on their own judgment in handling their own investment portfolios. Thirdly, foreign-funded enterprises should gradually retreat from speculative activities. In the near future, speculative behavior of foreign-funded enterprises would be directly hit by macro-controls and various related macro economic policies. Some privately-run enterprises have already been clamped down by such policies. This is a reminder for foreign-funded enterprises to minimize speculation and reduce capital risk. Moreover, they should also strive to seek the best investment vehicle. Recently, China's reforms of state-owned enterprises constantly involved offering an olive branch to foreign investors. According to Sun Hongwei, the Chinese government is currently willing to sacrifice part of its benefits in exchange for internationally advanced management experience and operations. For foreign investors, this is the best way to enter the Chinese market. He felt that the best choice for foreign investments to enter the Chinese market is to actively participate in the government-mandated industrial integration, as long as they do not violate China's economic principles. E-mail: zhangqinghua@chinanews.com.cn Tel: 8610-88387443 Fax: 8610-68327649 Copyright� 2004 Chinanews.com. All rights reserved. Reproduction in whole or in part without permission is prohibited. Disclaimer: viewpoints in the website do not represent China News Service Learn Chinese, Chinese Mandarin