Nearly half of Chinese, Hong Kong companies have gone ahead with deals despite compliance concerns, survey says
- Chinese, Hong Kong companies more cautious than American counterparts
- Globally, only 43 per cent of companies include compliance in large deals
Almost half of companies in Hong Kong and China have acquired or made investments in firms with serious compliance issues, according to a new survey by the law firm Baker McKenzie.
But, that makes them much more cautious than their counterparts in the United States and other parts of the world.
About 48 per cent of Hong Kong and China-based companies that responded said they acquired or made investments in firms they knew to have serious compliance issues, according to the survey.
About 68 per cent of US companies who responded said that they knew from the beginning that there were significant compliance issues, but made investments or purchases anyway, according to the survey. That compared to a 60 per cent average among companies who responded worldwide.
The survey interviewed more than 1,300 business leaders in Brazil, Canada, China, Germany, Hong Kong, Spain, the United Kingdom and the US. All of the companies had a global turnover of US$1.3 billion (HK$10.2 billion) or more.
“Failing to adequately assess compliance liabilities exposes the business to additional risk, but it also removes potential leverage for negotiating on the price or terms of a deal,” said Mini vandePol, Baker McKenzie’s Asia-Pacific regional head for its compliance and investigations group. “In today's business environment, companies cannot afford to ignore the significant strategic contribution that compliance functions can offer.”
