They may feel that doing business in China may be riskier in view of the legal aspect. This may not be the case if we think from another viewpoint. If we examine the different business culture in the east and the west, we may find that western people rely much on law and contract in daily business activities while Asian especially Chinese people rely on relation rather than law. What relation means here is friendship, understanding and mutual trust. Western people may meet in a short time for business deal when mutual benefits can be perceived.
Business is usually official rather than personal.
On the contrary, Chinese people would like to make friends first before any business. They then learn each other well and find opportunities for cooperation. Business is usually personal rather than official. Business deal is based on mutual understanding and trust rather than law and contract. Furthermore, since referral is also a main source of business opportunities in Chinese communities, there is also a group pressure to keep promises.