The current investment climate in China can best be described as "Damn if you do, and damn if you don't".
For many existing foreign investors, especially in private equity, exiting with a positive return is very difficult. There's no easy escape clause in their contracts, and their investments are locked in. They have to weather the economic and political storm ahead and hope to find a strategic buyer who will net them a healthy profit. This is their best scenario; in the interim, it is in their interests to create a value adding platform to further the business franchise. Successful strategies include forming strategic alliance between suppliers and distributors or other players in the same value chain. Understanding the needs of Chinese enterprises to migrate into differentiable products and services, foreign investors can gain an advantage by offering knowledge with capital.
Undoubtedly, the road ahead for foreign investors in China will be tumultuous, and pitfalls abound. The challenge remains the same, and we need to stay focus on building a successful business franchise.
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