In this issue we take a good look at China risk issues - real and perceived, and examine the mitigating factors to reduce these. A lot is made of China risk - often by media with magazines to sell, the naive investor who got burnt or those with other vested interests talking the subject up. We separate myth from fact, look at a wide variety of risks, provide comments and identify mitigating actions you may take to reduce risk to sensible, understandable and manageable levels. The issue begins with an overview "The Status of Rule of Law in China" contributed by Jeremy Sargent of Stephenson Harwood & Lo, commenting on some of the Chinese legislation surrounding this issue. Chris Devonshire-Ellis, Senior Partner, Dezan Shira & Associates contributes a commentary "The China Risk Factor - Risk Identification for China-bound Investments - Reality & Mitigation", dealing in some detail concerns in different types of risk. Political risk - the Taiwan issue, North Korea, Chinese social instability are all commented on. Moral risk - dealing with Chinas lack of a religious educational system leading to it being an amoral nation, and the concerns this has when negotiating and conducting business dealings - the issue that the moral ground both parties are negotiating from is not similar yet is often assumed to be so, and the problems this can create is discussed. China Government risk is described, and the difficulties in negotiating with government when it holds both regulatory and commercial interests are identified, Environmental risk, and the concerns over pollution and the lack of regulatory restraints on this topic, Health risks - what actually can happen to you working and living in China and what precautions should be taken - are all included. China Financial risk, with reform of the banking system and the linking of the RMB to the US dollar, issues over receivables and bad debt in China, in addition to China Intellectual Property risk (described as ‘very high’) are all discussed, examined and have mitigating tips for keeping out of trouble all described. Public Relations risks - what to do if it all goes horribly wrong - are also described, Licencing risks - ensuring you are getting what you believe you are - as well as Operational risk, ensuring you have sustainable power for example, are all identified. Business Cultural risks, and finally, Non-Compliance risk are all discussed and include some sage pointers for evaluating how to proceed with your China investments, particularly at negotiation stages. The issue is completed with Regional Updates, firstly from Sabrina Zhang, Regional Partner, Dezan Shira & Associates Beijing, and comments on "The Development of the Modern Logistics Industry in China", Lulu Zhang, Regional Partner, Dezan Shira & Associates Shanghai and "Increases in the Business Scope of a Commercial Enterprise to include Distribution Rights", and Alberto Vettoretti, Regional Partner, Dezan Shira & Associates South China, "Obtaining VAT Industrial Relief & VAT Rebates on Imported Software to China".
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