INTEL

Operation Risks faced by Intel in China

Intel Case

Identification of the risks that Intel faces in its operations in China

Emerging Economy Risk

The investments and growth drivers in emerging markets specially China which has a high hunger for resource have increased the prices of goods and services including commodities on which other emerging countries rely. The price increases have been justified by the improved balance of payments along with foreign reserve pileup. The investment have been increased in the emerging markets which had lead to decline in the financial costs of the business but have increased the appetite for risk of corporate officials (EIU, 2006, p. 2-12).

Large flows of capital had been provided to the emerging markets because of the cheap labour and cheap resources, which are, required for execution of business. Emerging markets turn out to more safe as compared to developed countries and the sovereign bond risk, which has been eliminated from the global market, can now be seen on the markets of emerging markets because the fundamentals of the emerging markets are improving. However, the emerging markets remain a volatile economic area where the sudden changes in the politics and economic policies leave a heavy impact on the investment of international companies, which have invested heavily in those markets. China despite an emerging market faces the issues of weak economic structure, corruption, legal issues, and regulatory regimes and labour markets. The labour markets are still not developed the political regimes which change in future may not be able to make seamless transition from one legal phase to another, causing trouble to the investor (EIU, 2006, p.2-12).

Political and Economic Issues

Emerging Markets including China are difficult interpret due to their transition from developing to a developed nation. Several changes are being made on the local level, which includes the structural and legal framework changes, which may impact the investors in future. The political structure in China is weak. China is still a monarchy and not a democracy the policies are dictated. The elites in the society mostly control political institutions and policies, which are drafted, are easily changed and modified according to the will of the influential. This type of political structure in China creates problems and uncertainty for the investors as policies are not clear and could damage the long-term preset targets of the company, which have been already defined. However, Intel Research and Development projects may be jeopardized due to changes in the political structure of the country. However, there is no formal approach adopted to address the issues of political issues. The major threat is the stability of the current political establishment and the economic policies. When the establishment changes the policies are also changed due to which business face trouble as new policy implications have greater consequences (Johnson & Tellis, 2007, p.3).

Red tapeism and supply chain corruption issues are still at large due, copyrights issues also exists due to which Intel cannot patent the technology in China. Duplication of products is a major threat to ...