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Legal experts: be aware of risks of outbound investment

POLITICAL uncertainty and ambiguity in asset ownership are among top risks facing Chinese enterprises seeking outbound investment in developing markets, legal experts said.

The growth of outward investment by Chinese companies has been growing rapidly with the momentum being driven by mergers and acquisition. In 2014, outbound investment from China jumped 14 percent to US$103 billion.

“The deals have been dominated by those in natural resource and high technology areas in the US and European markets,” said Elaine Lo, Asia Chair of Mayer Brown JSM, an international law firm.

As China pushes forward the “One Belt and One Road” program, there will be an increasing interest in high-quality projects in emerging and developing countries involved in the program, Lo said.

Lo cautioned that investors should take into consideration political risks, ambiguous ownership and compliance requirements that might emerge during the investment process in those countries.

Chairman of Mayer Brown Paul Theiss advised investors to evaluate the nature of the political situation in the advance of taking the project and protect themselves with contracts in circumstance of political instability.




 

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