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Iranian market not a land of golden opportunities: Chinese investors

(Ecns.cn)    13:55, January 04, 2017

It has been almost a year since the Iran nuclear deal was implemented, allowing international investors more access to the country. However, a number of Chinese companies already invested in Iran are warning would-be investors in Iran to maintain realistic expectations.

On January 16 of last year, the International Atomic Energy Agency announced that Iran had done enough to curb its nuclear development for international sanctions to be lifted.

The terms of the deal were originally agreed to in July of 2015 between Iran and six major world powers, including China.

Since the sanctions have been lifted, a number of Chinese companies have moved to invest in Iran.

However, Tang Yuezhen, head of the Chinese Chamber of Commerce in Iran, is warning Chinese investors to keep their expectations in check.

"The Iranian market is not as promising as it may have been advertised. Its business environment, national governance and financial regulations are all based on a local set of rules. Even though many projects are open for bidding, the process is usually carried out by their own ways of doing things here. If a newcomer is not familiar with the rules, it can suffer quite a bit."

The China Gezhouba Group, an international engineering company, is among the most successful Chinese firms operating in Iran, having already constructed two major hydropower stations there.

Even given the company's notable achievements, Li Hongbo, a manager with Gezhouba Group, says Chinese investment in Iran is still subject to tremendous uncertainties.

"New comers to the Iranian market must be aware of a very special nature of this environment, and that is it's subject to constant change. The government here does not have a comprehensive blueprint for development. Secondly, the rules governing foreign investment always seem to be changing. Finally, the local people, their ways of doing things and their moods are also ever changing. One can never say he's got a winning formula to conducting business here."

Chinese auto manufacturer JAC Motors has also developed a visible presence in Iran.

However, Xie Fang, a sales manager with the company, says they have begun to notice a growing level of protectionism in Iran, which he says is posing challenges to his company's operations.

"There have been many changes since the nuclear deal was announced, as there is an increasing protectionist trend. When Chinese companies come to Iran, the first question they are asked is always whether their investment can form a joint venture with local firms. Additionally, there are growing barriers in technical specification and tariffs when it comes to the auto industry."

The Chinese Chamber of Commerce in Iran is suggesting that an increasing number of investors from other countries are also going to create growing competition for Chinese firms.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Shi Jing, Bianji)

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