Microsoft Opens the Gates: Patent, Piracy, and Political Challenges in China

763 WordsApr 10, 20124 Pages
Microsoft faced many macro risks when operating in China. Many of these risks included software piracy, Chinese government pressure to transfer technology, host government promotion of competitor products, discriminatory procurement practices by sub-national authorities in China, and the strong encouragement for Microsoft to enter joint ventures with local firms. One main micro risk that Microsoft faced was when the Beijing Municipal government avoided Microsoft by awarding operating system software contracts for 2,000 PCs to Red Flag Linux. I see these risk increasing due to the fact that the Chinese Central Bank has put new restrictions to foreign exchange transactions in attempt to control the flow of convertible currency out of the…show more content…
These challenges created new opportunities for Microsoft to create new initiatives to benefit the Chinese economy which in result helped them build a strong footprint in China. Yes other firms do have the same risk management options as Microsoft did. Other firms did have the same risk management options because all MNCs faced the same macro/micro issues that Microsoft faced when entering the China markets which included pressure to transfer technology, host government promotion of competitor products, discriminatory procurement practices by sub-national authorities in China, and the strong encouragement to enter joint ventures with local firms. Microsoft is creating serious risks by supporting, financing, and transferring technology to local Chinese software firms but had to do so in order to have success in China. By them giving back to the Chinese economy, in return a large percentage of software users are using Microsoft product legally and illegally. In result, the end user is most likely using a Microsoft product and creates brand awareness. Microsoft used the appropriabiltiy theory to manage their risks by only sharing information with their partners that is only appropriate in order to make the partnership
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