G.F. 326
CONFIDENTIAL # &
機密
17
currencies are shrinking.
The problem of a declining
exchange rate cannot be avoided, due to the absence of
hedging facilities in China. But it should be noted that a weak currency is not a problem unique to China. The currencies of some other developing countries are even
more unstable.
43.
China's recent announcement of the intention to abolish foreign exchange certificates (FEC), without giving details of the timing or of the precise arrangements, has also caused uneasiness among joint ventures which are accepting FECS.
44.
(b) Problems in negotiation and operation
(i) Problems encountered during the
negotiation stage
Lengthy negotiations are often needed in
assessing the value of land and other resources
contributed by the Chinese parties involved in the joint ventures, largely because there is no market price for reference. On occasions, the foreign investors have resented the exorbitant prices claimed.
45.
The lack of data for feasibility studies is another problem faced by the foreign investors. In some cases, crucial information, such as prices for raw
materials, is not available.
46.
Equally troublesome is China's complex system of requiring specific and separate approval for each aspect of a joint venture project. As a banker put it, 'The problem in China is: no one department can give you an all-in approval but any one department can stop your project at any time.'
CONFIDENTIAL #B
No comments yet.
Private notes are available after approval.