Country Garden is a property development company based in Guangdong Province, China.

This is an
investment holding company principally engaged in the sales of properties. On December 2012,
Country Garden Holdings started to invested of RM900 million for a freehold coastal area in Danga
Bay, Johor Bahru, Iskandar Malaysia. This is the first project that bring Country Garden Holding
towards overseas market. Country Garden Pacific view Sdn Bhd doing a joint venture with the Johor
State government to develop forest city which a high-end integrated project consist residential and
commercial.

The Forest City is a mixed residential, office, and retail development project with a combine area of
13.86 square kilometer. This project 60% owned by Country Garden and 40% owned by its joint
venture with a Johor government holding company. Malaysia’s Prime Minister, Mahathir Mohamad
disallowed foreigner to living nor buy any flat in giant Forest City and those who wants to live there
will not be granted for visas. This is because the Prime Minister do not want those project to not
bring any benefit to the Malaysian citizen and want give Malaysian opportunities to enjoy the same
thing that their international market is enjoying. However, as they are wants to expand their
business internationally, especially to Malaysia, it is crucial to consider the political condition in the
destination country. Because any political condition that occurred in the country will brings a
political risk towards the Country Garden. Malaysia has unstable political and economical issue, it
could bring a problem such as corruption since the company need a big sufficient amount of money
to financed the project.

Since that Malaysia has a relatively high political uncertainty, there is a possibility that Country
Garden will affected by it. First method that the firm can do to overcome the issue is adaptation,
means incorporating risk into business strategies in some ways; partnership and localization.
Partnership can be informal arrangement or include joint ventures. In this case, the Forest City doing
a joint venture with Chinese real estate giant Country Garden and Johor Sultan. This partnership
provide the firm an ease way to leverage an expansion plan, such as adapt with the Malaysia’s
environment. The localization entails modifying operation, mixing the production or some elements
to suit the local taste and culture. Even though Forest City cater the international market, they also
need to consider the certain things that match with Malaysian preference (less Chinese), not only in
terms of pricing but also flavor and design. This strategy also can be used to shed the company
image that is said bringing in an influx of Chinese people into Malaysia and assure the Malaysia’s
government that their project is not like they afraid it would be.

Risk are unavoidable when we are doing a business, but it can be managed to reduce the impact by
forming a strategy to handle it. The second thing that Country Garden should do is conducting an
assessment about Malaysia’s political stability in order to develop the business plan and strategy.
The firm can collecting the information by build a social network among politician issues in Malaysia.
Beside, it also can be collected from the employees or agencies such as bank, political consultant and
others.

The last method is to do clarification by lobbying, refers to the policy of hiring people to represent a
company’s view on political matters. According to the CNA, a statement of clarification had been
issued by Country Garden to the Prime Minister in 2018, saying that the Forest City has complied
with all laws and regulations with necessary approvals to sell to foreign purchasers. Therefore, in the
case of Country Garden wants to maintain its presence in Malaysia, they should hire people to
represent firm’s view. However, it need a big amount of money to compensate them to give the firm
a special political protection.

In conclusion, the Forest City project is facing a political risk in which the interest empowered
political parties against the interest of previous government. However, these political risk could be
manage by adaptation, information gathering, and lobbying. Adaptation approach can be used to
turn the Chinese stigma by recruiting more Malaysian and less Chinese. Secondly, by gathering a
trust-worthy information can give the company a time to form a strategy before face it directly.
Lastly is to do lobbying with a purpose to gain clarification from the local public official to influence
his or her position on issues relevant to the company.