(Yicai Global) Nov. 20 -- The business deployment of Chinese companies in the Belt and Road projects has become increasingly intensive. However, corresponding legal risks are also increasing, and the challenges need to be better addressed, warn industry executives and observers.
As the business along the Belt and Road is booming, enterprises have to deal with various legal obstacles, said Xu Lirong, chairman and party secretary at China Cosco Shipping Corp. Ltd. (COSCO), at the 9th Lujiazui Law Forum held on Nov. 18. They face many lawsuits, involving equity, labor, antitrust and foreign investment review, and all parties need to work together to find better solutions.
In the process of "going global," Chinese enterprises encounter varying policies of different countries and regions, and the legal environments pose challenges. Moreover, enterprises face changing market supervision regulations and multiple legal risks in such areas as anti-trust, direct investment, intellectual property protection, taxation, labor and environment.
Change of government in a given country may pose a major political and legal risk, Xu said. However, many enterprises also neglect corporate social responsibility, like environmental protection, and they sometimes fail to respect host country’ law and culture.
Chinese enterprises should avoid vicious competition among themselves in the process of going out, suggested Lu Hongbing, deputy head of the All China Lawyers Association.
Chinese Enterprises’ Increasing Involvement in Belt and Road Projects
Cosco has deployed 113 ships in the Belt and Road route with a shipping capacity of 1.2 million ‘Twenty-foot Equivalent Units’ (TEUs), up 68 percent over the same period of last year, Xu revealed. The transport volume reached 3.75 million TEUs, an increase of 36 percent.
The transport volumes in Europe, India, Southeast Asia and Africa increased by 5.4 percent, 120 percent, 54 percent and 81 percent, respectively.
From January to September this year, the freight volume of China-Europe land-sea freight trains has increased by more than 150 percent and the number of customers has grown from three at the beginning to 470 now. The number of freight trains increased from less than three trains a week to between 14 to 17 trains per week, Xu revealed.
"The rapid business growth in the related areas along the Belt and Road has verified the market potential of the region," said Xu.