(1). There are three main risks that Microsoft has confronted in China, namely: (1) a negative government attitude and reception of Microsoft, (2) software piracy and (3) a domestic software industry that not only has support from the government but is also becoming increasingly competitive with Microsoft services and products. These risk have already and will continue to change in the future. In some cases, such as government reception, they may diminish as Microsoft deepens its cooperation with the government. In other cases, such as completion from domestic firms, it will most increase. These risk are not necessarily unique to China and will likely also be encountered in other developing nations were the government has as much influence over society.
(2). To many it’s political risks, Microsoft, on the one hand has actively pursued cooperation with China’s national government as well as with sub-national governments. These efforts included agreeing to investments in China and allowing the government to see the source code of its OS. Because the Chinese government is so involved in every aspect of life and business in China, getting their approval and support is essential for its development there. On the other hand, Microsoft also has supported U.S. government efforts to persuade China to create a more level playing field for foreign firms in China. Microsoft will most likely continue both these efforts going forward as they provide it with the best options and flexibility.
(3). In dealing with sub-national and local governments, Microsoft was confronted by their efforts to support local firms, their support of local businesses, and local laws and regulations that are in addition to what is required by China’s national government in Beijing. On the other hand, sub-national and local governments also provided Microsoft with opportunity to complete deals, such as its agreement with the Shanghai municipal government in 2007 to build a R&D center there, unconnected with the national government.
(4). It most like that other foreign firms will face many, if not all, of the same challenges that Microsoft has faced in developing its presence in China. Conversely, Microsoft’s early arrival and dedicated efforts to gain approval among the various stakeholders that will or can influence its development, provide it with a number of risk management options that other companies may not have developed yet.
(5). Yes, Microsoft is creating serious risks for itself in supporting, financing and transferring technology to local software firms. The possible risks include provide local firms with the ability to produce products and services that are based on Microsoft intellectual property but compete directly against them. One way to manage the risk is not to reveal the most essential aspects of their technology to local firms. Another way, is to persuade those others to work with or for Microsoft.
(6). Yes, Microsoft should follow Google’s challenge to Internet censorship. Like Apple’s challenge to the FBI, what it might lose in “official” support it will gain from public support not just in China but across the world (McCormick).
Works Cited
Luthans, Fred, and Jonathan P. Doh. International Management: Culture, Strategy, and Behavior. 8th ed. New York: McGraw-Hill Irwin, 2012. Print.
McCormick, R. “Apple VP says FBI encryption order ‘puts everyone at risk’”. The Verge. verge.com, 06 Mar. 2016. Web. 26 Mar. 2016 http://www.theverge.com/2016/3/6/11170710/apple-fbi-vp-software-encryption-order-risk
