I Risks and difficulties of going global
　　Economic and cultural risks of going global is greater than its political and policy risks.
　　Data shows (Figure 1): the proportion of enterprises who believe economic and cultural risks present greater challenges is higher than the proportion of enterprises who believe that political and policy risks are more difficult to overcome. To be specific, the most important sub-categories of challenges among economic and cultural risks are“difficulty in finding business partners in the host country”, “local customers don’t understand Chinese enterprises and brands”, and “differences between domestic culture and culture of the host country”. While among the political and policy risks, the proportion of enterprises who believe the host country’s government or public has a negative reaction towards their investment business and the proportion of enterprises who believe the risks of unstable political environment of host country are high, and both are below 50%. The above data indicates that economic and cultural risks encountered by enterprises going global are higher than political and policy risks. Therefore, enterprises should start with more efforts on the prevention of economic and cultural risks, strengthen their internal management, and guarantee investment safety.
　　1. Risks of investment in Africa is obviouly higher than that in Europe& North America
　　Africa is an open market, appealing not only to US, Europe and Austria, but also to emerging economies like Brazil and India. Like investment in other regions, Chinese enterprises’investment in Africa faces fierce competition. Apart from this, there are some uncertain and instable factors in the political and economic development of Africa. According to The List of Risks of Overseas Countries (Regions) Invested by China released by Forbes in early 2012, the risk of investment in Africa is the highest. Among the 37 most risky countries and regions, 23 are from Africa.
　　As revealed by a survey comparing difficulties and risks encountered by enterprises’ investment in Africa and Europe & North America (as Figure 2), the dimensions of major difficulties and risks to enterprises which invest in Africa are all higher than that of enterprises which invest in Europe & North America. What’s remarkable about political and policy risks is, 74.2% enterprises who invest in Africa believe that enterprises lack knowledge about the legal system and market risks of the host country, while 67.6% of them believe that the host country has an unstable political environment. In terms of economic and cultural risks, what’s noticeable is, 88.9% enterprises that invest in Africa think that it it difficult to find business partners in the host country, 87.2% believe cultural differences lead to a major difficulties encountered during investment (the degree of difficulty is higher than that in Europe & North America), while 82.1% enterprises who invest in Africa think their employees are not adjusted to the local living environment. We can see from above survey results: it is more risky for domestic enterprises to invest in Africa than to invest in Europe & North America. When evaluating development opportunities in Africa and other emerging markets, enterprises should attach much importance to the potential risks from investment.
　　2. Risks of small and mediumsized firms is distinctly higher than that of large firms
　　Through comparison and analysis of difficulties and risks encountered by large and small firms in the process of overseas investment, as figure 3 indicates, except employee’ adaptation to the local living environment, dimensions of other risks to small firms are all higher than that of large ones. This shows, compared with large firms, small and medium-sized firms lack both disposable resources and development experience. To numerous small and mediumsized enterprises which compete to go global as their development at home meets bottlenecks, it is necessary and imperative for them to investigate and grasp clearly the risks accompanying opportunities.
　　
　　 II Capability and strategies of risk prevention
　　As the world economy becomes increasingly integrated and China opens more and more to be outside world, going global has become an inevitable trend for Chinese enterprises. Meanwhile, pressure from cultural accumula- tion and competition at home has also inspired the motivation of enterprises to go global. But in the overall context of the world financial crisis, the “bottom fishing” attitude of some Chinese enterprises has placed them under excessive risks, bringing about hidden risks to their long-term development.
　　1. Prudent going global decision, adventurous actions
　　Regarding the risks of going global process, 96.4% enterprises believed that they always conduct careful internal and external analysis before important overseas investment decisions, and 95.1% enterprises said they are able to undertake a thorough diagnostic of a variety of possible outcomes when they make important overseas investment decisions. The survey data shows, domestic enterprises adopt a prudent attitude when they make going global decisions. However, as high as 96.7% enterprises report “they are always brave, do not avoid difficulties and operate as soon as possible after making foreign investment decisions”; 85.4% enterprises report “they will not retreat despite short-term losses in order to achieve their international strategy goal”; even 76.3% stated “they undertake international strategy of leaps and bounds and the pace of their overseas investment is large”. The survey data shows, domestic enterprises are a bit radical when executing their global decisions, which may further raise the risks of internationalization.
　　A survey of further comparison between different attitudes of state-owned and private firms towards risks reveals(Figure 5), in the process of internationalization, compared with private firms, state-owned firms are more prudent towards risks, while private firms are more inclined to take an international strategy of leaps and bounds, significantly increasing their pace of overseas investment.
　　We can see from the risks confronted by enterprises going global and their attitudes towards them that enterprises’ foreign investment faces high degree of external risks, while enterprises tend to take investment strategy of leaps and bounds, which further increases their investment risks.
　　2. Internal risk control: large firms are better than small ones, private firms do better than state-owned ones
　　As overseas investment risks rises, it is very necessary for overseas Chinese enterprises to establish and develop a set of scientific and comprehensive risk management and emergency control system. To mitigate ongoing global risks, enterprises shall start with strengthening their internal risks control mechanisms. In this process, enterprises should strengthen their research and assessment of possible scenarios for further risks, improve regular risk evaluation mechanisms, improve dynamic monitoring of major risks, strengthen reporting and emergency coordination mechanisms, and take active and effective anti-risk measures.
　　The survey of measures taken by enterprises to strengthen their internal risks control indicates (Figure 6): in terms of drafting international programs, 81% enterprises reported that they had developed a set of comprehensive international programs in general, and 77.3% stated they had developed markets, products and other detailed plans. With respect to their internal organizational setups, 81.8% enterprises said that they had established specialized departments such as an Overseas Department to manage foreign investment and operations, 78.8% said their corporate functions are equipped with expertise in overseas investment management, and 68.1% said they had established a complete information system for managing global supply and storage etc. Concerning the implementation of international programs, 79.1% enterprises mentioned that they convened staff regularly to assess and improve international programs, and 89.7% disclosed that they paid attention to recommendations from overseas frontline staff and adjusted overseas business strategies promptly.
　　According to the above data, enterprises going global have undertaken solid efforts in general to strengthen the development of internal risks control mechanisms.
　　Data of figure 7 shows, the establishment of internal foreign investment risk control mechanisms of large firms is generally better than small ones. For example, 84.6% large firm said that they had drafted a set of comprehensive international programs, 83.8% said they had developed markets, products and other detailed programs, while 75.9% and 74.7% of small firms have done the sam.
　　
　　We can see from data in figure 8, the development of internal foreign investment risk control mechanism of private firms is generally better than that of state-owned firms. For example, 93% private firms reported that they paid attention to recommendations of their overseas frontline staff and adjusted oversea business strategies promptly, 79.7% private firms said that they convened staff regularly to assess and improve their international programs, while such proportions are 80% and 71.9% respectively in state-owned firms.
　　3. Turning to external forces: small, private firms and firms that invest in Africa need more
　　In addition to strengthening inter- nal risks control mechanism, the building of external risks prevention mechanism is also an important procedure for enterprises going global to prevent and defuse investment risks. For example, Systems for Offshore Safety Risk Precaution and Information Reporting of Outbound Investment released by the Ministry of Commerce require various overseas commercial institutions, competent commercial administration of local people’s governments and the relevant chamber of trade shall earnestly collect information, analyze impacts and influence of offshore safety risks on Chinese outbound investment, and report such analysis results to the Chinese enterprises and the relevant enterprises which are stationed in the target countries.
　　External help channels often turned to by enterprises surveyed in order to prevent and defuse financial risks indicate (Figure 9): the external help channels often turned to by enterprises include: (1) the local Consulate of China; (2) establishing close relationships with local government, community organizations, and trade unions; (3) the local Chinese chamber of commerce; (4) Chinese domestic chamber such as CCPIT. What’s more, some enterprises even establish joint-ventures, cooperate with local enterprises and employ local people and companies with the ability to handle political risk such as lobbying.
　　A comparison of the difference between external assistances sought by large and small firms, state-owned and private firms, and enterprises that invest in Europe & North America and in Africa shows: (1) small enterprises are more likely to turn to external forces in order to prevent and defuse investment risks. For example, 56.1% small enterprises said that they would turn to the Chinese domestic chamber to prevent and defuse investment risks, while such proportion is 33.8% for large enterprises;(2) private firms are more likely to turn to external forces to prevent and defuse investment risks. For example, 51.1% of private enterprises said that they would turn to the Chinese domestic chamber to prevent and defuse investment risks, while such proportion is only 38.6% in state-owned firms; (3) firms that invest in Africa are more likely to turn to external forces to prevent and defuse investment risks. For example, 69.2% enterprises that invest in Africa stated that they would turn to the local Chinese consulate to prevent and defuse investment risks. While such proportion is only 59.7% for enterprises that invest in Europe & North America.