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Beware of the risks before going ahead with plans

Updated: 2015-01-12 13:54
By WANG TIANLING (China Daily)

Sixth, China must avoid the risks of economic nationalism.

Economic nationalism has become a threat to many international energy enterprises. Bolivia's nationalization of energy assets in 2006, Mongolia's rejection of China Shenhua Energy's participation in the development of Tavan Tolgoi (the world's largest untapped coal deposit) in 2011 and Indonesia's ban on exports of unprocessed ore this year have all harmed international enterprises from China and many other countries.

In the long-term, it is important to understand the roots of economic nationalism in order to prevent Chinese enterprises from falling prey to it.

Seventh, China must avoid the risks brought about by local trade unions.

Deciding how to tackle trade unions is a headache for Chinese businesses, no matter whether they are operating in developed or developing countries. SAIC Motor Corporation failed to invest in South Korean carmaker SsangYong Motor Company partly because it could not effectively work with the local trade union.

To ensure sound development of the Silk Road Fund projects, Chinese enterprises must fully understand the differences between Chinese and foreign trade unions, carefully fulfill their social responsibilities and maintain a sound relationship with local trade unions that upholds the spirit of mutual benefit and equality under the law.

Eighth, China must avoid the risks posed by a lack of knowledge about local markets and a lack of experience running international projects.

Chinese businesses should clearly differentiate between short-term emergency needs and long-term rigid demands to avoid the embarrassment and waste caused by newly built roads with no cars on them and no ships docked in newly built ports.

In 2010, when the China Railway Construction Corp finished a light rail project in Saudi Arabia, it registered a net loss of 4.1 billion yuan ($669 million; 542 million euros). Clearly there is also a great need for Chinese enterprises to improve internal management, learn common international practices and exercise strict control over budgets in compliance with international norms.

The author is a senior research fellow at the Institute of Modern International Relations, Tsinghua University. The views do not necessarily reflect those of China Daily.

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