Chinese firms’ planned investments of US$350b in projects along New Silk Road exposed to risk
A joint report from Baker McKenzie and Silk Road Associates says while the Belt and Road Initiative offers plenty of new business opportunities, Chinese companies and their partners will be exposed to risks in countries lacking political and legal stability
Chinese companies and their partners could together pour some US$350 billion on projects in the next five years in the over 60 nations covered by Beijing’s “Belt and Road” trade and investment initiative while fending off a host of challenges, according to global law firm Baker McKenzie.
As infrastructure such as roads, ports, railways and airports get funded and built by Chinese state-backed firms in some of the nations, private Chinese firms and international partners will fund new business opportunities there, according to a report published on Tuesday by Baker McKenzie and consultancy Silk Road Associates.
“While [the initiative] was seen at its inception [in 2013] as predominantly the preserve of Chinese state-owned enterprises, funded by Chinese banks and staffed by Chinese workers ... there will be plentiful of opportunities for those local and multinational companies that can work hand in hand with Chinese organisations,” said Stanley Jia Dianan, chief representative of the law firm’s Beijing office.
While declining to address the political forces associated with the initiative, he noted in some projects, Chinese firms have found themselves bearing the bulk of the financial investment and risks in nations lacking the required capital and that ban foreign majority ownership in key industries.
“It looks just like in the early days when foreign companies entered China, they have to form joint ventures, with the Chinese partners dealing with obtaining government approval and helping get sovereign guarantees,” he said.
