""China has a legal system but enforcement is missing, particularly on things like intellectual property and contractual issues," according to Jack Perkowski, managing partner of JFP Holdings, who after 20 years on Wall Street has spent the past 15 years in China. He warns investors to be "very carfeful looking at competitive positions of companies in China because it is such a competitive market with tremendous price pressure on most products". For example, a market leader can quickly find its intellectual property has been stolen, its products copied and its price position undercut. (..)"
Of course companies in China can be victims or perpetrators or both. When China was not booming Foreign Direct Investments (FDIs) into China were seen as dependent on the investment climate, including the legal situation in regard to IPRs. However, China has enough foreign reserves and because of the incredible economic growth (for the coming year expected at 10 percent) China attracts FDIs no matter what the legal situation is.
Read the FT article here.
Photo/text: Danny Friedmann