China remains a risky investment proposition

While some of the biggest economies in the world are slowing to a standstill, China's IT sector is booming, generating $US96.7 billion in the first eight months of this year.

Despite the optimism Gartner Australia has warned high-tech companies that China is still a risky investment proposition although it appears likely it will be approved for membership in the World Trade Organisation (WTO).

Commercially, its 1.3 billion population is an attractive drawcard creating a huge demand for IT products, services and knowledge.

Gartner research director French Caldwell said the "maze of rules, regulations and corruption in China" can be too much of a hindrance.

"Without significant political and economic liberalisation, foreign technology investment in China will continue to be lethargic; it is the province of companies large enough to make long-term investments and shrewd enough to avoid the pitfalls of China's multilayered bureaucracy," he saidGartnerG2 Asia Pacific research director in Hong Kong, Lane Leskela said the Government retains considerable control over the economy with the result that making business decisions involves more than just economics.

Drawing on research titled "Key Issues for Enterprises Entering China's Market" Leskela warned China's leaders may have a definite vision for the economy, but it means western companies have to pay attention to larger risks including geopolitical conflicts between China and the US.

"China's poor infrastructure and lack of familiarity with western business norms mean that western companies that have already transformed themselves into e-business cannot simply transfer their practices into China," he said.

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