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Foreign Business in Tibet? Investor Beware

Stocks in this article: RIO HOT CEA IHG

TAIPEI ( TheStreet) -- Foreign trade in Tibet grew more than 152% last year to $3 billion, the state-run China Daily newspaper says. The world's highest railway at more than 4,000 meters above sea level has brought other economic benefits to the same far-away, Chinese mouthpiece Xinhua News Agency adds.

You would think Tibet is a hot place for investment. Try again. Tibet is a frigid region in the Himalayas of southwestern China. Its ethnic Tibetan people are poor, and their ever-edgy relations with China's ethnic Han majority have sparked a run of riots, self-immolations and government crackdowns over just the past five years that I can best remember.

Avoid shares of foreign companies that have invested there without other reasons to pick their stocks. The money isn't rolling in yet, and some signature MNCs have already come under huge international pressure to leave.

The 1.2 million-square-kilometer region of 2.84 million people, such as yak herders and orange-robed Buddhists, surely has attracted foreign attention. A Tibetan government in exile headed spiritually by the Dalai Lama is based in neighboring India. Activist groups that want more ethnic Tibetan autonomy in China work out of Australia, the United Kingdom and the United States.

China's army entered Tibet in 1950 and secured it the following year. After an uprising in 1959, China installed its own political system, decisively ending traditional rule by religious figureheads known as Lamas. Today the Chinese government aims to develop Tibet, making locals better off in the process, along with other parts of relatively poor western China.

Whether or not Tibet has gained from China's investment since the railway opened in 2006, activist groups have come down hard on participating international companies, usually those in mining or tourism. Their well-practiced global publicity campaigns have dented the reputations of firms in Tibet and discouraged other companies from making the long railway journey at all.

For example, the Australia Tibet Council did a "successful campaign" against Sino Gold Mining in 2003, council communications manager Kyinzom Dhongdue says. Its campaign motivated the Sydney-based company to leave Jinkang mine in Eastern Tibet a year later, the group says on its website. Eldorado Gold of Canada bought Sino Gold in 2009. Because of the Sino Gold campaign, global mining giant Rio Tinto (RIO) decided against digging in Tibet "for political reasons," Dhongdue says.

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