Answer

Part 1: Political risk

Introduction.

Myanmar, whose capital is Yangon, is a southeast Asian country neighboring China, Thailand, India, Bangladesh. and Laos. Since February 1, the country has been in a state of emergency following the military coup, following the win of Ms. Suu Kyi in the last general elections (Cuddy 2021). The military, led by Min Aung Hlaing, claim there were election malpractices, thus the need for reforms. This state of emergency has put Myanmar in a very bad state in terms of trade and economic growth. This paper aims to look at some of the political risks that come with foreign direct investment in Myanmar and some of the strategies to combat this.

Risks.

                Myanmar was the world’s 18th-biggest copper producer in 2019, according to the International Copper Study Group (Reuters Staff 2021). Trade and commerce in Myanmar at the moment faces a lot of challenges. While the country has over the past decade (2010 to 2019) had a steady rise in GDP contribution, rising from 0.3 trillion kyats in 2010 to 1.03 trillion kyats in 2019 (statista research development 2021), venturing into the copper mining sector through foreign direct investment subjects the company to a myriad of political risks, both macropolitical and micropolitical.  Political violence, which is currently ongoing in the country, puts the investment at a high risk of interference from either party at war (Tobman 2018).  This might lead to the destruction of property, assets, and other investments. Another major risk is government interference or from local parties. For a country in a state of emergency, it is far much riskier to get involved in foreign investment because the government taking over might decide, anytime, to seize all company assets and investments or in other words, expropriate. With the growth of instability of markets in Myanmar, the central bank, on 12 May 2021, exchanged at about 1700 kyat to the dollar which was the highest for local exchangers (Nikkei staff writers 2021). This puts a strain on investors in terms of payment of host country employees even though exporting is cheaper than imports.

Recommendations.

It is paramount for the company to employ a number of steps and precautions before making investments in a foreign country, particularly Myanmar a country under political turmoil. First, as a potential strategy, the company should do a thorough political risk analysis using both the home and host country’s recommended agencies. Risk analysis would ensure the company protects its investments and ensure steady growth. Second, the company could look into other regions for investments while Myanmar stabilizes (Tobman 2018). Third, it is also important for the company’s stakeholders to involve other external parties particularly government allies and political leaders. This will aid in the creation of a good rapport and probably get insights on when best it is to venture into the market (Tobman 2018). Lastly, the company could look into joining with other local companies or creation of mergers this in a bit to reduce risks involved with entire operations as a multinational corporation.

                Conclusion.

                Corporations looking to venture into foreign markets through Foreign Direct Investments often face a number of risks particularly political risks as has been discussed in this paper. Some of the risks this paper has identified are; political violence brought about majorly by the coup, government or local parties’ interference, rise and fall of exchange rates which adversely affect buying and selling of currencies. This paper also mentioned potential strategies which would be used to mitigate these risks and some of them include; performing thorough risk analyses, diversifying investment regions, involving external influential stakeholders like political leaders, and lastly creating mergers with local companies. These mergers would serve to ease the pressure that would be directed to the company if it were solely operating as a foreign company.

Part 2: Corporate Political Activities.

Huawei is a leading Chinese telecommunication company. Huawei is dedicated to ensuring that it brings digital to every person, home, and organization for a fully connected, intelligent world (Huawei 2021) The company targeted and got into the Australian business environment in 2004. Since then, the company has been very proactive in Corporate Political Activities. These corporate activities were aimed at participating in Australia’s national broadband network (NBN) project and the development of 5G telecommunication technologies. This paper, therefore, is going to focus on why it engaged in corporate political activities in Australia, factors that led to its proactivity in Australia, and reasons for its unsuccess.

                Huawei has been very proactive in engaging in political activities. Huawei’s sponsorship of the National Rugby Team, Raiders was seen as a strategy to please the governors since it is situated in the Australian capital Canberra, the focal point of government and public strategy-making (Brinkman 2021). The company also subsidized outings to headquarters in Shenzhen, China for senior political figures from both significant parties (Welch 2018). Huawei Australia, an independent Australian subsidiary board, has seen the appointment of members such as former Minister of Foreign Affairs, former Victorian Premier, and former Navy Rear Admiral. This strategy was aimed at maintaining significant persons close to the board, the person who would otherwise influence government decisions to enable the company to take part in communication infrastructure development.

                Huawei’s proactivity was, of course, fueled by a number of factors. One of the major industrial factors that fueled Huawei’s proactivity was the fact that Australia was heading into a phase of communication infrastructure development. Industrially at the time the country aimed at getting a much-improved broadband network to provide faster internet that would enable access of internet and its services much easier and much faster (Cradduck 2011). In the organization level, Huawei organization offers solutions in cloud services, smart cell devices, tablets, and telecommunication networking (Alkhawajah 2019). Huawei as a telecommunication expert felt it could provide. At the issue level, the company faced stiff competition from already existing institutions such as the ZTE company. This had the company put up very proactive measures for it to stand out against the already flooded tech business world.

                Despite all these efforts, Huawei has been largely unsuccessful in its attempts to participate in the Australian National Broadband Network and 5G technology development. Cave (2019) illustrates that there was not an Australian authority in Canberra ready to create a brief for the ministers in Australian parliaments that would have soundly laid out a path for Huawei to take part in the national communication infrastructure development. Amid worries of public safety, Huawei was prohibited from offering telecom solutions for the network projects in Australia because allegedly, Huawei had been in cohorts with the Chinese government to spy on the country’s organizations (Muralidhara and Faheem 2019). Muralidhara and Faheem (2019) continue to argue that Huawei’s secrecy policy, lack of straightforwardness and transparency, and Ren Zhengfei (the company founder)’s reluctance to give public meetings just fortified the resistance the organization received.

                In conclusion, this paper aimed to look at reasons for Huawei’s proactive engagement in Corporate Political Activity, factors in the industrial, organizational, and issue level that might have led to its proactivity, and reasons for that led to its failure. This section found that one major reason for its proactivity was largely to build its public image. Among the factor that led to this proactivity was; demand for a communication infrastructure development, the ability of the company to partake in the project due to its specialty in the field, and lastly competition from other well-established technological companies. One major factor that contributed largely to the company’s unsuccess was the idea that the company’s management was in plans with the Chinese government to spy on the host country. This, of course, created mistrust in the company’s motives. This was coupled with the company’s secrecy policy and lack of transparency in clearing the matter.