SOEs urged to manage overseas businesses

17 january 2013

The State-owned Assets Supervision and Administration Commission urged central State-owned enterprises to strengthen the legal management of their overseas businesses to prevent legal disputes abroad that could result in the loss of profits.

According to SASAC, the economic losses could reach hundreds of millions of dollars, if SOEs lose the cases during legal entanglements abroad.

In addition, companies defeated in the disputes may be edged out of the markets in those regions.

“As central SOEs step up plans to go abroad and deepen their internationalization strategies, the legal risks they are facing have been increasing with continued overseas mergers and acquisitions, contracting projects and invitations for strategic investment,” said Huang Shuhe, vice-director at SASAC.

Huang noted that SOEs should enhance their mechanisms to prevent legal risks and boost the hiring of consultants on law affairs.

Huang said that the types of legal disputes have diversified, ranging from contracting to intellectual property, environmental protection, labor responsibility cases, products quality, security transactions, and disputes in other areas.