Header graphic for print
China Law Blog China Law for Business

Is China Too Risky? Aon Says No.

By Dan Harris on Posted in China Business

Not quite sure why, but I have been writing a lot lately about the risks of operating a business in China. A few months ago, I did a post entitled China Is The Risk. I See Clouds and a few weeks ago I did a post entitled Secure And Insecure Countries. In Light Of Egypt. An Open Thread. Both of these posts talked of the risks of being in China and sought to compare that risk to other countries.

In response to the Egypt post, a loyal reader sent me a link to a super-cool interactive country by country risk map compiled by Aon Corporation, a leading “provider of risk management services.” The map ranks countries from Low Risk to Very High Risk, with Medium-Low Risk, Medium Risk, Medium-High Risk, and High Risk in between those two extremes. The rankings are based on the following:

  • Exchange Transfer
  • War/Civil War
  • Strike, Riot, Civil Commotion, Terrorism
  • Sovereign Non-Payment
  • Political Interference
  • Supply Chain Disruption
  • Legal & Regulatory

Here are how various countries fared:

  • China —  Medium Risk
  • India —  Medium-Low Risk
  • Vietnam —  Medium Risk
  • Bangladesh —  Medium-High Risk
  • Thailand —  Medium-High Risk
  • Singapore —  Low Risk
  • Cambodia —  Medium-High Risk
  • Laos —  Medium-High Risk
  • Hong Kong —  Low Risk
  • Taiwan —  Medium-Low Risk
  • Japan —  Low Risk
  • Russia —  Medium Risk
  • Malaysia —  Medium-Low Risk
  • Indonesia —  Medium Risk
  • Egypt (before the street demonstrations) —  Medium Risk
  • Brazil Medium —  Low Risk
  • Mexico —  Medium-Low Risk
  • South Korea —  Medium-Low Risk
  • North Korea —  Very High Risk

Interesting. What do you think?

  • Aaron

    I think it’s rather subjective and generalized.
    For one, putting Mexico as Medium-Low risk is very questionable. Mexico is arguably very unstable, with drug cartel attempting routine assassinations of public officials and security officers. The political risks to businesses may not be very apparent right now.
    For another, putting India as Medium-Low risk is equally questionable. India’s Naxalite insurgency has increased its attacks on the Indian security forces in the last year, and so far, Indian government’s attempt to control the Naxalite problem (now their official #1 security problem) has been ineffective at best. The Naxalites affect nearly 1/3 of India’s territory on the East, with a lot of mines. India’s microfinancing efforts have failed in recent years, perhaps increasing the Naxalites appeal among the poor tribal people in the East. India’s attempts to increase its manufacturing capabilities have only increase land and labor disputes, aggrevating its problems of Naxalite and Seccessionist movements.
    I don’t see how Mexico can be rated Medium-Low when its officials are being targetted daily by powerful drug lords, nor how India can be rated Medium-Low when it has 1000′s of armed insurgents roaming free nearly unchallenged in 1/3 of its territory.
    In my opinion, both Mexico and India may be similar in rate to Philippines.

  • Edward Chow

    I think this map is off the mark in a number of places. Mexico as low risk? I guess it is if you don’t mind getting caught in the crossfire of druglord battles. But the most interesting thing about risk (and you hint at it with Egypt) is how quickly it can change. Egypt’s risk has obviously gone up, as has the risk of every Arab country. And have you been reading about Cambodia and Thailand? They are on the verge of war, something which would obviously change the risk calculus for the both of them. Of course, Thailand’s risk was, until a few days ago, too high, and appears to have been calculated during the more turbulent period last year.

  • Richard

    Mexico is a high-risk country in the supply chain disruption category alone. Take a look at cargo theft patterns over the last three years.
    Indonesia is definitely a medium-high risk country or greater due to the significant threat of terrorism and natural disaster–higher than in other parts of the region.
    If India is medium-low risk, China definitely is.

  • Theo Taylor

    Not the best analysis of global risk available. The fact that most of Western Europe is low risk considering the state of the eurozone is quite alarming.