Corruption, Lack of Transparency Continue to be Top Business Risks in China
Elevated corruption and lack of transparency in governance and business activities continue to be top risks with doing businesses in China, according to Maplecroft.
Bribery and embezzlement of corporate/public funds are common in big-tickets deals, particularly in the energy, infrastructure and pharmaceutical sectors.
In order to demonstrate its commitment to address social issues, such as corruption and environmental degradation, the government increasingly uses investigation and prosecution of high-profile individuals and companies to set examples.
"Therefore, foreign businesses in China are likely to face increased scrutiny over the medium term. A lack of transparency and weak corporate governance also present notable challenges for companies, which should exercise stringent due diligence along the entire value chain, including local suppliers, business partners, subsidiaries and sub-contracted manufacturers," says Maplecroft in its latest country risk report on China.
However, as the Chinese government shifts the emphasis of economic growth from speed to quality and sustainability, the country remains an attractive and competitive foreign investment destination, according to Maplecroft.
"Given the scope and depth of the domestic market coupled with relatively stable political system, the country still offers great investment opportunities over the long term, especially in high value-added, highly innovative industries," says the report.