Recently I shared the top 10 countries to invest in across the globe. From a foreign investor perspective, the United States attracts the highest volume of incoming investment dollars. However, China, is running a close second and growing rapidly as an economic power house.
In fact just over a year ago, China’s economy was worth almost $10 trillion dollars according to the Economist. China has successfully attracted both individual and institutional investors from all corners of the globe. With some of the highest populated cities in the world, everyone is looking to get a piece of the action in the huge Chinese marketplace.
But moving abroad, as we all know, takes time, planning and some due diligence. Here are just a few tips that may help you consider if China is on your investment hit list.
- Be aware of investment risks
First and foremost you need to understand the political and regulatory landscape of the country. In China specifically, the government controls freedom of expression. Businesses that involve sharing opinions, shaping ideals or attempting to influence values or behavior are likely not to be successful in China, unless they support the Chinese leadership agenda. Facebook for example has been blocked in China as the government claims the site was used in 2009 by protestors to organize rallies and other activist events. Staying away from controversial business lines and potential lawsuits is certainly advised no matter where you decide to invest your money.
In addition to having a handle on environmental concerns related to corporate governance issues, and fiscal policies, investors should also study the market and know their competition. Studying their operating models and go to market approach can help you get ahead of the game against the existing incumbents but also future market entrants.
- Diversity, Diversify
There is an old saying that you should never put all your eggs in one basket. Taking your hard earned money and putting it into an unknown market is risky. You should diversify your investment over a wide range of markets or industry sectors. Creative Choice Group is a good example of such diversity. We have several lines of business including our commercial property and development firm in Florida, Etech Global Solutions based in Texas which is a leading contact center solutions provider and InfoCity, in India, which is one of the first smart cities. All uniquely different business models. But all successful in their own right.
So one might ask, is there something special about China that might drive one to diversify even further? The answer is yes. In China state owned enterprises (SOEs), which are largely non-entrepreneurial, enjoy many special privileges bestowed by the government, according to a “Financial Times” report. Some examples include access to cheaper loans, and having some political influence on the government. As a result, it is sometimes difficult for privately held firms or investment groups to compete against the SOEs or even have access to the market.
- Invest for the Long-term Investment
A long-term investment approach may look risky, but can offer the best overall financial return. According to a report out of Entrepreneur.com, some of the fastest growing industries and market sectors in China which are growing at a rate of 25-30% include automotive, consumer and retail, logistics and transportation, technology and media, financial services, and energy/resources. These are key segments to consider for future growth and long term potential.
If you are considering making a move into the Asian-Pacific markets, now might be the perfect time. Lots of growth potential and an appetite for foreign monies!