Deals in China Going South

China Law Blog points to a pretty thorough backgrounder on what's happened to a KKR's investment in a concrete business in China (Forbes), which is to say, nothing good. I think it's typical of a lot of private companies here - where you have relatively unsophisticated managers who build businesses and who are used to solving problems, er, extra-legally. The idea of accountability to others is often a foreign one.

Take the disaster that's Asia Aluminum for instance, particularly after foreign bond holders realized that they had very little recourse to force management to do much of anything under Chinese law (WSJ). That said, as China Law Blog points out, these aren't issues unique to China but any developing country where property rights laws aren't as mature with local business people having a political advantage over foreign investors:

Let's just say one of my favorite joint venture stories involved a client who after being hung head first outside a high floor window in Russia he decided he would gladly relinquish his controlling interest after all.

On the other hand as the Forbes article points out, KKR is undeterred - "it disclosed a $150 million investment in Chinese milk supplier Ma Anshan Modern Farming, another closely held enterprise. That marked the buyout firm's second announced investment in China."