A Risk Assessment of Taiwanese Investments in China

Abstract

This paper presents an analysis of the risks associated with direct investment in China from the perspective of a sample of 112 Taiwanese business owners with investments there. Ten risk factors, each associated with political as well as financial/economic issues, are evaluated. The two greatest risks identified are the likelihood of armed conflict and that of China nationalising Taiwanese investments. Other risk factors include the attitude of the Chinese people towards Taiwanese investments, the likelihood of not remaining competitive in the Chinese market, rising labour costs and worsening Chinese economic conditions. The study finds that the overall risk associated with political factors is slightly greater than that associated with financial/economic factors.