Chinese firms urged to assess risks overseas

Overseas Chinese companies have in recent months gained more attention across the country as an increasing number of staff security issues make media headlines.

Senior management from some leading Chinese overseas companies believe the companies should better assess risks of operating in a foreign country and adopt multi-dimensional approaches to avert or mitigate such risks.

Factors for heightened risks

Overseas Chinese firms have encountered threats to both staff and their investments more frequently in recent years and cases in West Asia and North Africa have been a major contributor to the hike.

China's trade ties with the two regions have witnessed constant growth in recent years. Chinese companies also have an increasingly bigger presence in the two regions amid growing trade ties, exposing them more to the waves of social unrest and political upheavals that started last year.

Wang Xifeng, deputy general manager of China Civil Engineering Construction Corp's Nigerian branch, told Xinhua that Chinese companies tended to be more interested in investing in high-risk regions as yields there were higher.

However, he warned high yields always came with high risks and companies could suffer great losses due to security incidents.

Yan Lijin is the CEO of CETC International Co Ltd, an affiliate of China's state-owned electronics giant, CETC. He said, as China became a more prominent global player, armed groups also started to target overseas Chinese workers in a bid to win more space in negotiations with the government.

Overall risk assessment needed

Wang sorted security risks facing overseas Chinese companies into three categories: political risks such as regime change and riots; local security risks such as robbery and kidnapping; and attacks by terrorist or extremist groups.

"Overseas Chinese companies should make sufficient preparations for the three types of security risks, especially for the first kind, which has long been underestimated or even overlooked," Wang said.

Leading Chinese companies investing in Libya suffered hefty losses last year as the country plunged into turmoil, which later developed into a fully fledged civil war resulting in the defeat of Muammar Gaddafi's government.

China's leading telecom equipment company, ZTE, was among the companies that suffered big losses in Libya. ZTE Deputy CEO Chen Wenjie, who is also the general manager of the company's North African branch, said the aggregation of Chinese companies in certain countries meant aggravated risks and greater losses in case of security irregularities.

He called on the Chinese government to set up a mechanism to regulate and properly guide the overseas expansion of Chinese companies.

Cairo-based veteran investment manager Han Ruihua said, aside from assessing overall risks and making adequate emergency plans, Chinese companies should also speed up the process of localization, creating more job opportunities for local communities, instead of sending in Chinese workers.

"Overseas Chinese companies should work to ensure that local staff members see their own interests integrated with that of the company and become willing to safeguard the interests of the company," Han said.