Lp5.1 Assignment: Managing Political Risk, Government

Managing Political Risks in the Chinese MarketStudent’s NameInstitutional AffiliationManaging Political Risks in the Chinese MarketQ1. What political Risks does Nokia face in Asia, particularly China?Political risks are government interferences in the foreign company’s affairs. This type of meddling can range from contract denial to nationalization of industries, especially through asset confiscation. China is, for the most part, a problem as concerns political risks (Luthans & Doh, 2015). A foreign company that invests in China must consider the possibility of nationalization of industries. In fact, a similar scenario had occurred in 1949. Other common political risks include expropriation, confiscation, contract repudiation, and currency inconveniences. Expropriation could be a major problem when a government agency assumes ownership of Nokia, private property, for purposes that are deemed to be in the interest of the public (McKellar, 2010). Another form of political risk that occurs in China is the endless battle between the central government and the country’s provincial and local governments. The battle concerns the types of law that apply to businesses and whether foreign businesses should observe these laws. As such, it is difficult for a foreign company