Myanmar coup highlights risks for Chinese investors working overseas

Very few Chinese firms operating in Southeast Asia conduct proper risk assessments, which makes them vulnerable during power changes, researcher says

Companies need to be more vigilant in assessing the potential for collateral damage, academic says

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China is a long-time supplier of weapons to Myanmar’s military. Photo: Reuters

Published: 12:00pm, 7 Feb 2021Updated: 2:12pm, 7 Feb 2021

The recent unrest in Myanmar should serve as a reminder to Chinese investors of the political risks involved in financing projects overseas, especially in Southeast Asia, and the importance of performing due diligence, observers say.

“Aung San Suu Kyi, who has been in power [in Myanmar] for five years and whose party won the election, might have looked to have been in a very secure position,” said Yin Yihang, a researcher on Myanmar affairs with the Taihe Institute think tank in Beijing.

“But in fact, if you look deeper, the military is still very powerful and geopolitical risks in the country remain high.”

Yin said that compared with their counterparts from Japan and South Korea, very few Chinese firms doing business in Southeast Asia carried out risk assessments, preferring to build ties with local governments, which made their investments vulnerable during power changes.

That was particularly the case in countries like Myanmar and Cambodia, where Chinese investors, usually in association with local authorities, were active across the spectrum of industries, he said.

“[Cambodia] appears to be a stable country as the Hun Sen government has been in power for a long time, but once a power change takes place, the impact on society, including the investment environment, will be huge,” Yin said.

“That’s why it’s important for Chinese investors to make a good assessment beforehand and to take a longer term view.”

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