Risk Analysis On Foreign Direct Investment Of Chinese Enterprises

FDI is an important component of national economy and it is an important international strategy for the country.Since the reform and opening to the outside world in1978,China’s economy has developed rapidly and grow at a faster pace than the western developed economies.With the development of economy,especially after joining the World Trade Organization in 2001,China’s foreign direct investment has entered the fast track of development.In 2002,China’s foreign direct investment flows was $2 billion 700 million,and by 2015 it had reached $145 billion 667 million.In recent years,with the implementation of the supply side reform and China’s enterprises "going out" and "The Belt and Road" strategy,China’s foreign direct investment still maintain a rapid development trend.At the same time,we must realize that due to the immaturity of the foreign investment system and the uncertainty of the world economic situation,China’s foreign direct investment is also facing many risks.The article launches the discussion,from the perspective of foreign direct investment risk analysis and based on the present situation of foreign direct investment in china,and HUAWEI as a representative enterprise.This paper has summarized a large number of previous literature.It is thought that China’s foreign investment risk needs to be further studied.Secondly,it briefly introduces the basic theory about the risk of foreign direct investment,including the concept and classification of risk,and the influencing factors.Then take HUAWEI as an example.This paper briefly introduces the present situation and characteristics of HUAWEI’s foreign investment.This paper analyzes several kinds of risks encountered in overseas investment.It includes specific national risk,market entry barriers,legal risk,exchange rate risk,interest rate risk,cross cultural risk,technical risk and operational risk.And then find out the strategies used to deal with each of the risks,bringing inspiration to other enterprises.Finally,on the basis of the former part,this paper gives some suggestions for the enterprises to avoid risk.In the political risk control,it includes investment before the investigation,selection of friendly regional cooperation and compliance operation;in the control of exchange rate risk,it includes foreign exchange futures hedging,foreign exchange risk management consciousness,diversified production and operation;in the humanities environment differences in risk control,it includes recognition of cultural differences,cross culture for employees training,integration and innovation culture.