How to create and execute the optimum China investment strategy

With growing foreign direct investment in China, it’s essential that U.S. companies get their China investment strategy right to minimize risk and maximize reward. Fortunately, Pamir are experts in guiding U.S. companies with their China investment strategy.

Creating and executing the optimum China investment strategy has proven to be a challenge for many companies – or at least that is the perceived view among many in the media. However, recent figures from Statista show that U.S. company investments in China grew to $126.1 billion in 2022, up from $115.73 the previous year – representing an increase of just under 9% ^[1]. Despite recent media focus on the tit-for-tat trade war between the two nations, it’s clear that U.S. businesses still consider China to be a worthwhile and lucrative market.

These figures, in fact, represent foreign direct investment (FDI) in China from U.S. companies. U.S. FDI in China is different from simply purchasing shares in Chinese companies on a stock exchange, rather it’s an investment of one company into another company located in a different country, i.e. investment by an American company into a Chinese company.

U.S. companies use FDIs as a beneficial China investment strategy vehicle, but they come with challenges

An American company’s China investment strategy via FDIs results in the U.S. company owning part of the Chinese company into which it has invested. In the U.S. the parent company as the investor is defined as an FDI if it owns 10% or more of a foreign firm, also known as a foreign affiliate. Most U.S. companies use FDI vehicles to supply both the American market and the local market opportunity.

While FDI investment is not necessarily anything new, technological advances and access to more accurate information have significantly benefitted FDIs as a China investment vehicle. FDIs bring multiple advantages, such as access to new markets, local expertise, local networks and partners, and decreased cost of labor, materials, and production.

However, investment in China via FDIs also come with challenges. These include an ever-changing legal environment that in certain verticals are not necessarily conducive to foreign investment and particularly U.S. investment in China.

Investing in China also faces bureaucratic and administrative complexities, including certain verticals that only limit U.S. China investment to joint ventures (see ‘How does Pamir help you get your China business strategy right?’ for more).

Other issues include vague regulations concerning IP rights protection and cultural differences in business practices. It could be a tricky path to tread, particularly for U.S. companies pursuing a China investment strategy without any previous experience of the country’s complex business practices and ambiguous regulations.

Pamir has expertise in helping U.S. companies to optimize their China investment strategy

Fortunately, Pamir has decades of experience in advising U.S. companies in many verticals and of all sizes, including Fortune 100 organizations, to get their China investment strategy right. Our services are based on the five pillars of: Research. Analysis. Assessment. Action. Review.

Our range of investigative, assessment and analytic services allow our clients to understand – in depth – the context with which they are confronted – and to make the right decisions for their future investments. We have proven experience over many years of helping public sector, NGOs, and Fortune 100 organizations to get their China investment strategy – regardless of the investment vehicle chosen – just right.

We provide contextual understanding and analysis to capture a complete picture of China’s business landscape with unique insights – including local intelligence, and cultural and linguistic expertise – that are uniquely accessible to our team. Our deep expertise allows us to provide actionable recommendations based on facts, context, and analysis.

To help optimize our clients China investment strategy we offer among other things:

• Strategy definition and evolution – calibrating the current direction or creating an entirely new strategic plan, based on a balanced assessment of risk and reward.
• Market and competitive review based on sentiment analysis.

Unrivalled risk assessment for your China investment strategy

We concurrently monitor the threat landscape, which allows us to help minimize risk for companies, including:

• Threat landscape assessment, covering global geopolitical and localized risk and emerging threat exposure.
• Insider risk assessment — offered as a managed service and designed to identify employees and executives who may be at risk — to businesses that have complex HR requirements.
• Anti-counterfeiting – to determine the extent of the problem and to work with relevant authorities to resolve such disputes.
• Conflict of interest identification and resolution.
• Reputation protection – incorporating unique insights, proven over more than 20 years of successful consulting practice.

We help you understand, anticipate, and navigate change across key markets as well as build and execute the right strategy across all functions of your business, all of which is balanced against risk, exposure, and opportunity.

Our unrivalled research, data collection and analytics, and actionable, contextually-based assessments, and advisory services help our clients to understand risk, while optimizing rewards, to align their strategy and ambitions within the global and local context, while anticipating and adapting to change at a macro and micro level.

To find out how Pamir can help you to optimize your China investment strategy, while minimizing risk, and work as a long-term partner to help you meet your ambitions contact us today.

^[1] https://www.statista.com/statistics/188629/united-states-direct-investments-in-china-since-2000/