The Risk Of Foreign Direct Investment Of China’s Transnational Corporations And Its Preventive Measures

Since the reform and opening up in 1978,China’s national economy has developed rapidly,and its development rate is ahead of that of western developed countries..Since then,the development of China’s foreign direct investment has been further accelerated.Especially under the epidemic situation,China will become the only country with positive economic growth in 2020.China’s one belt,one road,and the "one belt and one way" initiative has been implemented in recent years.In 2020,China’s foreign direct investment flow will reach 903.992 billion yuan,ranking second in the world for five consecutive years,second only to Japan.But at the same time,we should also see from behind the data that there are great risks hidden by Chinese enterprises when they "go out".In this paper,the risks encountered by Chinese enterprises in the process of foreign investment as the research direction,first of all,the international investment risk theory as the research point,summarizes the various risks encountered in foreign investment.Secondly,by looking up the data of China’s foreign direct investment activities,this paper points out the characteristics of China’s current foreign investment and the classification of the risks encountered,and analyzes the sources of risks.Through the analysis,the risk types of China’s foreign direct investment can be roughly divided into: political risk,market risk,business risk,cross-cultural management risk,legal risk and technical risk.Combined with the State Grid’s investment in Brazil’s Meili mountain transmission project,this paper analyzes the risks encountered by the State Grid in Brazil,understands how the State Grid deals with the corresponding risks,analyzes the effectiveness of the measures,and then provides enlightenment for other Chinese enterprises to invest abroad.One belt,one road leading to the development of the national grid,is also an important brand in China’s implementation of the "going global" strategy and the "one belt and one way" construction.The State Grid is making profits in all countries and regions of the world,regardless of what type of country.Therefore,it analyzes the investment of the company in Brazil and how to handle the corresponding risks in the State Grid.This paper analyzes the effectiveness of the measures,and then provides enlightenment for other Chinese enterprises to invest abroad.Finally,taking the State Grid as an example,this paper provides some suggestions for Chinese enterprises in foreign investment activities.In the face of political risks,we should play the role of the state,establish good diplomatic relations,and improve the internal review system.In the market risk control,we should carry out diversified production and grasp hard currency.In cultural management,we should respect the local culture and actively carry out cultural integration.For technology,we should always control the core technology and improve the innovation ability of technology.