China has over 1.3 billion people, all of whom maintain low levels of debt. With a strong middle class that is only growing each year, the Chinese economy is becoming important to the Western world, especially to investors. Investing in China is becoming more and more popular as people and companies are looking outward for potential growth opportunities, but how can you cut down on your portfolio risk while investing in American Depositary Receipts from foreign countries like China? Ask yourself first if the ADR is from an industry leader. You may be surprised to find familiar companies like Apple doing quite well in the Chinese market.

Does the company use major global accounting firms like Ernst & Young or KPMG? Are big investment funds sponsoring them or do they have venture capital funds backing them? Are there plenty of Americans on the board? Knowing the answers to these questions can help cut down on the risks that come with poor auditing, lack of support, and other red flags that could put your portfolio at risk. The good thing is that there are plenty of options to choose from.

As of 2011, there are more than 300 companies in China with market caps all totaling $900 billion, almost all of which are available in the major American stock exchanges. It’s almost impossible for personal investors to verify the authenticity of a Chinese company’s claim of being an industry leader in China, but anyone familiar with China may have an easier time recognizing major businesses. It’s also good to know if big chunks of the company’s equity are owned by internal management. This would indicate that it is a suitable investment. Having Americans on the board of directors is a bonus because it suggests that the Chinese company is concerned about gaining foreign insight.

Investing in China now can prove to be an incredible opportunity. The economy is on the rise and China’s growth as a country is expected to remain strong. Looking for highly-recognizable companies to invest in like Apple may be a good start, but certainly plenty of other opportunities exist in this flourishing market. Unlike in America, the Chinese middle class still seem to consume products at higher rates, even during slow economic growth and recession levels, making it one of the most robust middle classes in the world. That is certainly something that any American investor would want to take advantage of.

On March 13, 2012 By Richard Wilson

Practice Test

Investing in China – How to Get Ahead with International Investments

While many other countries have experienced a serious economic slowdown, China has continued to be a strong player in the global financial market. While growth has slowed somewhat in the past couple of years, investing in China can still be a good idea. However, as with any other type of investment, it’s important to weigh the risks before you decide what type of industry or sector to invest in. There are certain aspects of the Chinese economy that are doing better than others, and as an international investor, if you have the right guidance and expert advice, you can follow suit and broaden your portfolio.

Real estate, for example, may not be the best industry to invest in anywhere in the world at the moment. After a frenzied period of real estate development, there are now many empty buildings in China, with brand new skyscrapers left without tenants. When investing in China, you may wish to stay away from the real estate market unless you have a strong lead on a promising new development. Because the US is China’s largest trading partner, the two economies are intertwined. It’s possible to get a good deal on stocks or other investment opportunities if you know where to look.

There are a few ways to make your investment a safer bet. To begin with, when you are investing in China you will want to hedge your bets and protect your shares with collaring and other hedging options. Collaring can protect shares from any large downward moves, making your international investment far safer. Another factor to consider is whether or not to choose multinational corporations to invest in, or to choose Chinese companies directly. If you have little knowledge of the Chinese market, you may wish to stick to these multinationals for ease of research.

A safe way to go about investing in China is to choose a broad mutual fund, such as Matthews China or other options of this nature. This can be easier than trying to hand-pick individual Chinese companies to purchase shares in. With an annual growth rate that still is sitting at 9 percent, China can be an interesting and profitable market to pursue investments in. With a bit of caution, some professional guidance, and openness to negotiation, you can end up with some great deals. Mutual funds can be a good way to get started, while you gain a greater understanding of the market.

On March 12, 2012 By Richard Wilson

Practice Test

Investing in China – Is Investing in China Worth It?

Investing in China has been a hot topic of conversation among industrialized nations ever since China went communist in 1949. The veil of secrecy that covered China for many years made it difficult for companies to get into China and difficult for investors to find ways to put money into the country. But investing in China has started to gain momentum as the Chinese government has started to warm up to the notion of allowing outside investment. The country has seen a rise in industrialization and the standard of living for Chinese people living in the cities has started to go up as well. You can start to see wealth in the cities of China, but many companies are still wondering if it is worth it to invest in a country like China where the government still controls the media and information is hard to get.

The people of China have showed a desire for democracy in the past and continue to give indications that democratic ideas are flowing among the younger people. What is helping this feeling of independence is the investing in China that western companies are doing and the change that investment is having on Chinese culture. The idea that American fast food restaurants would flourish in Beijing was not something that people thought they would see anytime soon. But many of the larger fast food chains have been encouraged to consider investing in China and the result has been the infiltration of western ideas in a very closed Chinese society. But trade with China still has its challenges and those tend to surface from time to time.

Investing in China took a hit a few years ago when toys that were made in China were showing up in American retail stores with lead paint. In a rare humble moment, the Chinese government apologized for the indiscretion and promised to rectify the situation. At that point, people thought that investing in China would pick up again. But it took months for Chinese manufacturers to really solve the lead problem and trade with China suffered.

If your company is considering investing in China, you will want to spend a lot of time reviewing the laws of commerce for Chinese companies. Investing in China is much different than most other countries. If you do not follow the rules as they are written, you may find your investment was wasted.

Login / Register

Investing in China – What You Should Know

Investing in China – How to Get Ahead with International Investments

Investing in China – Is Investing in China Worth It?

Contact

Certifications

Company

Login / Register

Contact

Certifications

Company

Save your cart?