Taiwan-funded Enterprises In The Mainland Real Estate Investment Business Risk Management Assessment Model

The investment environment in Taiwan has undergone great changes in recent years. The present competence of its real estate market is by no means comparable with that of the past, due to the high price of the land, labor cost and the environmental-protection fees as well as a saturated market with low demand. By contrast, the mainland real estate market is quite different. Since the reform and opening-up policy carried out in 1979 in Mainland China, its economy witnesses a dramatic development. Now, the Chinese government also offers some preferential policies which have attracted remarkable international investment funds. The real estate businessmen in Taiwan take a fancy to the mainland market too. They want to seek development opportunities in such a market as has a increasing consumer demand with a relatively low investment cost.The real estate market of mainland China is comparatively new with a vast territory bust an inadequate set of government laws and regulations. In this market, interpersonal relations count a lot which may not warrant equity here. What's more, information access is not very satisfying, nor the inconsistent government policy and fierce competition. All these factors mentioned above pose a great threat to the Taiwan business personalities who generally apply their expertise gained in Taiwan as a blueprint to the situation here. In light of this problem, this paper follows the thematic line of investment environment in both sides of the Straits, disparity in land acquisition and risks involved in development and management. All the findings are for reference to those housing industry practitioners in their decision-making process.The principal purpose of this study is to establish a stratificational evaluation framework and compare the venture investment on both sides of the Straits for reference to Taiwan businessmen.. In the way of interviewing experts, this paper will weigh the relative importance by Delphi Method and carry out an empirical study through stratificational analysis of investment risks. There is a world of difference in the whole economic system and social environment on the both sides of the Straits. Moreover, the competent authorities in Taiwan now has only loosened its policy concerning Taiwan investment converted to mainland China, namely, from a total ban to a conditioned opening-up. Therefore, there is a high potential risk looming here.Through analysis of questionnaires and quantization of risky factors, this paper divides the risky factors in real estate investment as risks in investment,manufacturing, transaction, usage and others as five main categories. This paper will evaluate them each by turn. The conclusion drawn is that the investment environment in Taiwan is relatively sound with a low risk whereas that in Mainland China runs a medium degree of risks because the Taiwan market is more mature and healthy while the mainland market is still in the process of start-up with insufficient laws and policies. High profit is always followed by high risks, which also proves that the real estate investment takes on the characters as high profit, high risks.At present, the housing industry in Mainland China is still underdeveloped with a relatively low ownership and high demand in general. Obvious differences exist in land use and pre-sale systems in Taiwan and the mainland. Both real estate markets face structural adjustment. What's more, both financial policies face rigorous challenges. Each time after the in-season, the government will put the market under strict surveillance by means of macro-economic measures. Immediately, not only the local government will raise the minimal line of investment funds or even cancel development programmes, but also the financial institutions put forward strict measures. These will add to the risks for real estate investors. So, the housing industry in Mainland China is a very mirror of "high profit, high risk". Then as far as the Taiwan market is concerned, it is developing healthily into a mature and steady period with low risk and reasonable profit while the mainland market involves high profit and high risk.Thereby, if real estate investors can make a detailed estimate of both markets and ensure an efficient venture management in the investment flow, wrong decisions and high investment risks can be reduced and eliminated, what's more, an extra profit can be expected.The biggest contribution of this study lies in that it offers a definite and practical risk evaluation mode on the basis of real practices to those real estate businessmen. After that, the government can learn from the systems and expertise from developed countries in order to establish a nearly-perfect safety mechanism of real estate industry and a sound housing financial system ensuring a steady and healthy development of the real estate market.