China Remains High-Tech Risk For Many

Compiled ByDeborah Austin Despite its predicted approval for World Trade Organization membership in November, China still poses great risks for high-tech company investment, says a recent report from research/advisory firm Gartner Inc., Stamford, Conn. China's technology-sector development is hindered by lack of safe harbor for investment by foreign small- to medium-sized companies, which generally drive high-tech growth. Without greater liberalization, such development will remain limited to larger companies with resources for making long-term investments and avoiding pitfalls. "The Chinese government welcomes Western investment but subordinates this to its strategy of building up Chinese companies to compete in a global market," says Lane Leskela, research director for GartnerG2 Asia/Pacific in Hong Kong. The Communist Party, government ministries, and the bureaucracy retain much control over the economy, so "making business decisions involves more than just economics." Adds Leskela, "China's poor infrastructure and lack of familiarity with Western business norms mean that Western companies that have already transformed themselves into a e-business cannot simply transfer their practices into China."