Dan Watson, Contributing Writer
Every investment has two possible outcomes (Positive or Negative). When it comes to placing that investment in a foreign country it can be impacted by any number of
events outside of the control of the investor. These country risks
can and do influence the eventual outcome of the investment
(i.e. such country risks include but are not limited to political
risk, exchange rate risk, economic risk, sovereign risk and transfer risk, which is the risk of capital being locked up or frozen by
government action). There is also the risk associated with civil
unrest. For the past couple of decades we have seen thousands
of foreign companies rushing into China to make an investment,
assume the risk of that investment in order to become a part of
China’s future. For some that has proven to be a wise decision
while for others it didn’t turn out exactly as planned.
Today, China is the second largest economy on the globe
with a lot of experts predicting that it will surpass the U.S.
in the next few years. It has enjoyed an unprecedented
growth of its GDP over the past two or three decades. So,
with that thought in mind, the question posed by this article
is simply “considering everything that is happening in the
world today is China still the land of opportunity, is it still
worth the assumption of country risk by future investors?”
Unless you have been asleep for the past few months or iso-
lated on some deserted island you are very much aware of the
numerous global crisis that are evolving around us. Everything
from the Russians saber rattling in the Ukraine; the rise of ISIS
in the Middle East; rumors about a possible change in leader-
ship in North Korea; protesters in Hong Kong exercising civil
unrest. If you recall, Hong Kong was returned from a century of
British rule to Beijing on June 30, 1997. So far it’s been a fairly
peaceful movement.
This particular protest in Hong Kong would seem to be
mostly about the city’s special status based on the agreement
the city has with the Beijing government. Hong Kong is largely
autonomous from the rest of China, has greater freedom, and
even has a promise from Beijing to have free elections in 2017.
Although the Hong Kong protest is getting all the headlines
this protest is not just about Hong Kong. If we look at history, mainland China has had a long history of public protest.
That history impinges directly on what’s happening in Hong
Kong today. As we have seen, protest in China tend to come
and go with some solved using military force while others end
somewhat more peacefully with a simple compromise. This
particular protest is being looked at carefully by the foreign
Considering everything that is happening in the
world today is China still the land of opportunity?
China – Investor Chaos or Opportunity?
