Based on Rugman & Hogetts article they mentioned that “Probability that political forces will

negatively affect an organisations profit or impede the attainment of business critical

objectives” (2003). From the news article that highlighted about the policy reform in china,
by changes or modifying the policy, it also affects other macro-economic factors as well. The
potential investor will always put risk (economic risk, political risk and so forth) before
expanding their business to foreign countries. The expert will always look into the specific
countries political level and economic level and analyse the risk level for their organization if
it fall under the safe zone they will more likely invest or expand to the country they look into
(Johnstone 2010). They are two major risk where have a strong relation between each other
which are economic and political risk, economic risk simply defined as the country paying
abilities for example looking into their turnover and debts, whereas political risk simply
defined as the political decision that made by the country will it affect on the investors for
example the policy that are made by the nation are reasonably unbiased or biased towards the
nation, people, and investors (Perry 2013). The changes of China policy in having subsidy the
local phone industry affect the sales of the phone giants (Samsung and Apple) where they
used to be the top five seller phone product in the first quarter but lose out in the second
quarter after government providing subsidy to the local manufacturer. The changes of the
coal policy have given a big impact to the coal exporters around the world. These two
policies can be concluded to cause an impact to the foreign investor and the foreign market.
China is consider as an emerging market which simply defined as China’s economic growth
and industrial growing pace is coming up rapidly, emerging market have the highest
investment return compared taking pollution into account where is showing social
responsible towards the environment setting an example to China by making the policy
because of the haze that caused by coal burning it is good start for China as a communist
country leaning towards an open country today (Nelson 2008). China developed their own
legal and laws that are up to the international standard (Lin, Lin & Song 2010)

In conclusion, China is doing great as a communist country and as an emerging market. After
since the late 70s the international business activities had been rapidly growing. Many foreign
investors are looking towards this big market (China). China is well known for their low
minimum wages and low price for resources, by having these two criteria many foreign
investors had move their production company to China and operate in China with a much
lower operating cost. China macro-environment is so much more complex and dynamic
macro-environment factors especially that China is one of the hottest market and faster
growing emerging market today. To do extremely well in this growing market, investors have
to be very clear on what is happening on this market (China) and have a good understanding
of how the macro-environment works, and how the consequences and effect that cause
changes of any macro-environment forces to be prepare and ready to sustain the business in
China. Phone giants (Samsung, Apple and so forth) have been doing very well in china for
the past but china is building for the own local product to improve their own economic
forces, since after many years of experience they are strong enough to launch many of their
own local product today and even selling across international market.