China's Ability to Attract Multinational Companies

1098 Words5 Pages
In the business world, Management Information Systems (MIS) is one of the most important departments in business organizations and the main means of MIS is risk management. Business companies in general face different and varied risks as a result of activities which occur within the organization. In addition, companies are influenced by external factors such as economic and political conditions. However, multinational companies encounter more complicated risks, especially because of the scarcity information about the new environment. After China’s admission to WTO in 2001, it has become as one of the most important destinations for international business. It seems that China is a big market that is supported by the central government and has a strong potential economic and financial. This was the reason behind many multinational companies seeking a piece of the country's resources. Despite there being a great opportunity for business by multinational companies, there are so many risks that international businessmen have to deal with in order to remain competitive in the Chinese market( ). The aim of this paper is to analyze these risks and the strategies that have been applied to manage them. The risks will be divided into three types. First, political risks will be discussed then will be flowed by economic risks and finally the social risks. Political risks: The most significant political risk face multinational companies is intervention of the government in their business activities and one of the manifestation of this intervention is the nationalization which means the transfer of ownership of the project or industry from private companies to government (^_^). In China, These include direct nationalization of ... ... middle of paper ... ...business, it also presents risks in the same measure. Some of the risks which have been discussed include political risks, social and cultural risks, and economic risks. All multinational companies willing and with plans to do business in China must be well aware of the risks involved for better preparations on the type of risk management strategies they will employ. From the above discussion, it can be deduced that political risks are the most inherent and therefore pose the greatest problem to the multinational companies. This is partly because the legal system of a country dictates almost all the other sectors in the economy. If the political aspect is well taken care of, the other sectors will fall into place. Senior managers should always consult the more experienced companies or professional firms to avoid those risks that come as surprises to the company.
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