OVERSEAS INVESTMENT: RISKS AN OPPORTUNITIES

Chinese investors have increasingly gained interest in the Central and Eastern European regions (CEE), as a result of a growing number of overseas investments and further development of the “One Belt and One road” initiative. 

Nowadays, these European regions offer numerous investment opportunities, through which Chinese investors can enter the European market and connect the “One Belt and One Road” area, thus killing two birds with one stone.

Nevertheless, it is also true that the Chinese investors who wish to tap into the international market are exposed to various legal risks. These issues are almost invariably encountered by new players in the cross-border investment field. Understanding the existence of these potential risks, and taking preventative measures in advance, will be essential skills that all Chinese investors must develop in the years to come.

On October 24th, A&Z Law Firm and CEE Attorneys held a seminar entitled “Overseas investment: the co-existence of risks and opportunities”. 

The three speakers who headlined the event were Mr. Zdenek Tomicek, Founding Partner of CEE Attorneys and Partner of Prague office, Mr. Andrzej Szmigiel, Member of the Board of Directors and Partner of CEE Attorneys Warsaw office and Mr. Andrew Zhang, Head of the European-American and Overseas Investment Desk and Partner at A&Z Law Firm’s Shanghai office. 

The seminar was predominantly attended by Chinese companies and professionals interested in overseas investment projects.

To begin the seminar, Ms. Paulo, the Director of Overseas Investment Projects gave a brief introductory speech on the topic. She was followed by partners from CEE Attorneys, who introduced the general background of the investment environment and culture in the CEE region, and analyzed CEE business opportunities divided into key sectors. 

According to the statistics from the International Monetary Fund, CEE economies are projected to grow faster than their western European counterparts, between 2017 and 2020. As target markets, CEE countries offer a winning combination of safety and growth. This is due to their higher than average active population, and the many existing economic incentives. 

Two of the headline speakers analyzed the key sectors in the CEE region, as well as the development projection statistics in countries such as Poland, the Czech Republic and Romania. The key sectors in question include automotive, aerospace,the ICT industry and business support services amongst others.

From a legal perspective, overseas investment projects invariably entail risks. Mr. Zhang analyzed the causes and types, as well as the counter-measures to such legal risks, by using relevant and illustrative examples.

The number of overseas investments has steadily risen since 2002, but the number of failed cases is still quite significant. What are the common legal risks involved in cross-border investment projects? Some of the most frequent and noteworthy ones include currency exchange matters, due diligence, compliance, IP, labor, and employment. One of the key issues is the lack of understanding of local jurisdiction systems, laws and regulations.

Effectively, the best advice to Chinese investors is to conduct rational investments, by carefully preparing the business plan strategy ahead of time, consulting competent professionals to assess the potential risks and carrying out the operation smoothly. Conducting on-the-spot due diligence and obtaining support from a bridge team is also essential to avoid cultural, legal and economic barriers locally.

Despite these principles being frequently outlined, numerous Chinese investors do not always make the most of this advice.

The seminar was a success and the speeches were met with applause, a follow-up Q&A, as well as information and business card exchanges between participants. A&Z Law firm is delighted to engage in and undertake the organization of such well attended events. 

We do this to share the high-quality insights offered by the best professionals, and in the interest of informing investors about the potential risks of their current and future transactions. In this case, the seminar was also a successful illustration of the business potential of the CEE region.

A&Z Law Firm will continue organizing high-quality seminars and providing platforms for Chinese investors, who wish to bring their companies onto the international scene in a professional manner.