This article is one of the bet365 offer articles in the 11th edition of "Chinese Social Sciences Journal"

Since the central government proposed the “going out” strategy in 1997，Chinese companies take various forms to go bet365 offer，Remarkable results: foreign investment expanded from greenfield investment to cross-border mergers and acquisitions and other forms，M&A investment in 2009 accounted for 34% of the total foreign investment in that year；Transformation from quantity-scale type to quality-benefit type for bet365 offer contracting projects；The order of the expatriate labor market improves，The proportion of advanced technical labor dispatch increases。According to statistics from the State-owned Assets Supervision and Administration Commission，As of the end of 2009，A total of 108 central enterprises invested in 5901 bet365 offer units，bet365 offer assets of central enterprises exceed 4 trillion yuan，Profit that year accounted for 37% of the total profit of central enterprises.7%。

But，Due to the increasingly complex investment environment faced in the process of “going global”，Enterprise risks have increased significantly。Frequent huge losses，Especially in financial derivatives、Investment mistakes and losses in infrastructure investment and other fields，Exposed that the institutional mechanisms of central enterprises in corporate risk management are not yet sound。The recent huge losses of bet365 offer’s Saudi project，Highlights the urgent need to improve the level of risk management of central enterprises in the process of "going global"。

　　bet365 offer Huge Loss

　　January 22, 2011，bet365 offer Co., Ltd. (hereinafter referred to as "bet365 offer"), which ranks 133rd among the world's top 500 companies, published an announcement，Since October 31, 2010，The bet365 offer Corporation shall exercise and perform all the rights and obligations of the company under and arising from the "Safa Mecca Safa to Mugodasha Light Rail Contract, Saudi Arabia"。According to this agreement，bet365 offer will acquire bet365 offer Corporation 20.7.7 billion yuan compensation，And the head office will bear all future profits and losses。This means，The loss amount of bet365 offer’s Saudi project will be limited to a maximum of 13.8.5 billion yuan。

According to the previous announcement of bet365 offer on the Shanghai Stock Exchange on October 26, 2010、Announcement simultaneously issued by the Hong Kong Stock Exchange: The company’s light rail project in Mecca, Kingdom of Saudi Arabia is expected to occur 41.A huge loss of 5.3 billion yuan。This is the largest overseas loss in the history of a Chinese construction company。bet365 offer’s net profit in the first half of 2010 was 3.3 billion yuan， The losses of the Mecca light rail project swallowed up all his hard work for half a year，This loss is equivalent to 62% of bet365 offer’s full-year profit in 2009.9%。

bet365 offer’s explanation for the huge loss is，The main reason for the loss is that the project adopts the bidding method，Instead of bidding，It is designated to be constructed by bet365 offer。But based on the current disclosure，bet365 offer’s huge losses on the Saudi light rail project are due to the lack of professionalism and prudence in overseas operations。If bet365 offer pays attention to risk control when signing contracts，Huge losses will not happen。It can be seen from this case，State-owned enterprises implement the “going global” strategy，Facing triple risks: legal risks、Business risk and asset management risk。

　　Legal bet365 offer

　　bet365 offer investments by central enterprises involve large amounts、High sensitivity，Political and economic interests are intertwined，We must be highly vigilant about the latest changes in the international investment environment in the process of “going global”，Don’t ignore long-term potential legal risks for short-term benefits。Some companies are accustomed to doing things according to domestic practices in the process of "going global"，Doesn’t pay attention to acting in accordance with local laws and regulations，The huge bet365 offer losses turned into a confusing account。

The legal risks of bet365 offer’s Saudi project are particularly typical: bet365 offer’s Mecca project is not a government-aided project，Not a hard task。Mecca light rail project does not use public bidding，Instead, one-to-one negotiation is adopted。Most of the projects that adopt the bidding method are private projects，Government projects with such a large amount of money, such as the Mecca light rail, use negotiated bidding，Very rare。

bet365 offer stated in the announcement，The company has based on the contract signed by both parties，Submitted change and claim information to the owner，The owner promises to set up a special committee after the project is completed，Discuss related claims and compensation issues，But not yet approved by the owner。Statement by the management of bet365 offer，Project changes are in accordance with Saudi requirements，So there is reason to make a claim。But this reason is untenable，The reason is the design change proposed by the owner、Change the construction period、Added functions, etc. should be clearly stated and signed in writing before implementation，It is very rare to claim losses after changes。The real areas where you can claim losses are the other party’s poor cooperation and slow demolition, which are difficult to foresee in advance in the contract，Use the loss claims in these places to illustrate the loss liability of the entire project，Cannot withstand professional scrutiny。Therefore，bet365 offer’s huge losses，Management should bear risk management responsibility。

　　Business bet365 offer

　　The overseas business investment of central enterprises does not match the income，Lower quotations to obtain projects，But they are often not good at controlling project construction costs，The problem of out-of-control costs is serious。bet365 offer did not fully estimate the project volume and risks during the bidding process，Quotation too low。According to the management of bet365 offer: “During the actual implementation process，Especially during the project subcontracting process，The design is done by a foreign company。If designed by foreign countries，means standard、There are some problems with ordering，May be specified by (design company) itself。The system and management of Saudi Arabia are different from China，As far as I know, many things are specified，Specify which companies provide the equipment。”The key to this question，It is to determine in the contract whether the power of the design company lies with China or Saudi Arabia，And how much authority is given to the design company when hiring a design company，What standards are they required to design according to，These are the rights of the general contractor。

However, in the bet365 offer Saudi Arabia project, the design was subcontracted to foreign companies，Purchasing high-priced foreign equipment，The operations and projects of foreign companies are not in China，Making the supervision of the above operations not only beyond the scope of Chinese jurisdiction，It is also beyond the scope of bet365 offer’s corporate risk control。Even in domestic contracting projects，Design changes for the contractor、Procurement rights and other aspects are also matters that must be carefully considered when signing a contract，Cost、Detailed price estimates are required before signing the contract，Even inaccurate estimates are a serious responsibility。This business of bet365 offer has made serious mistakes in all internal and external risk management links。In this case，Construction project costs are out of control、Big losses are inevitable。

　　Asset bet365 offer Risk

　　Central-owned enterprises have huge overseas assets，But due to the lack of effective supervision mechanism，Many overseas companies have made business mistakes、Heavy Debt、Operating losses、Problems such as asset loss。The loss of overseas state-owned assets occurs in the following situations: squandering by overseas personnel、Waste、Absconding with money；Conducting high-bet365 offer speculative operations overseas without approval，Causing huge losses；Not approved or relevant legal procedures not completed，Register state-owned assets overseas in an individual’s name；Improper appointment of foreign personnel leads to loss of state-owned assets, etc.。In addition，As an important part of state-owned assets, resource-based state-owned assets and a large number of hidden assets that are often ignored by people，such as trademark、Corporate reputation、The loss of patents, etc. is also very serious。

Therefore，Central-owned enterprises must further improve their risk bet365 offer level in the process of implementing the “going global” strategy，Strictly abide by disciplines and laws，Strengthen business process bet365 offer，Promote asset bet365 offer security，Timely and comprehensive disclosure of information。In terms of risk bet365 offer operating mechanism，State-owned enterprises must establish and improve corporate governance structures，In the decision-making process of major projects，The board of directors should be given full play、Supervisory Board、Discipline Inspection and Supervision、Audit、The role of key departments such as risk bet365 offer，Establish a Board of Directors、Supervisory Board、Discipline Inspection and Supervision、Audit、Five-in-one risk prevention system for risk bet365 offer。In the process of implementing the “going global” strategy，In industry selection，State-owned enterprises should pay more attention to real industries，Ensuring the safety of overseas state-owned assets、Maintaining and increasing value，Ensure the successful implementation of the country’s “going global” strategy。

(Source: "bet365 offer Social Sciences Journal" Author: Shi Jie Author's unit: Institute of Industrial Economics, Chinese Academy of Social Sciences)