Spotlight on China: Ernst and Young Reveals the World's Biggest Market

No longer are investors and corporations bound to a single place. They are in constant endeavor to search international markets and are looking beyond the traditional markets to acquire high growth and gain competitive advantage. The Big Four firms is aware of this new trend and with the aid of Ernst & Young's Cross-border Transaction series, it throws light on the rewarding transaction landscape in certain well preferred promising markets. As the name suggests, "Spotlight on China", the third report by Ernst & Young, it presents an overview of the practical transaction reflections, political background, confrontations and opportunity sectors surrounding deal-making in China. The China contract market took off with its escalating consumer demand, augmented foreign direct investment opportunities, and outstanding economic growth. China has an astonishing annual growth rate averaging over nine percent for two decades. This statistics place China over UK into the fourth place in the world economic league table. With the largest population in the world, the Chinese market is hungry for consumer goods of every description. Moreover, China constitutes the largest market for mobile phones and is the world's second largest PC market. China has emerged as a serious factor in global capital market and attracts record quantities of foreign direct investment. Given these factors, the foreign companies naturally see China as an investing land of competitive necessity. But China is not a virgin market. It is characterized by intense competition and entrepreneurial activity in a variety of fields. China also does not allow some of the essential democratic freedoms that are taken for granted in the Western countries. State intrusion is a common problem faced by companies in China. Lack of reliable information, unclear governance and financials, ownership qualms, and the need for regulatory approval throughout the transaction stage are reasons for the high failure rate for deals in China. Due diligence is a critical step for transaction in China. Valuation is not straightforward in China. To close a deal in China is definitely a reason to celebrate. But, it is the beginning of challenges to be faced. The investors need to factor in the cost of building vigorous financial functions from the very beginning. Hard work on improving these factors is a first priority for attention in any Chinese transactions. China remains as a prospective market with the differences and difficulties slowly diminishing. -Article provide by Big4.com