Risk Management in the Chinese Business Environment, Focus on Component Procurement

The study was conducted to research the possible risks that enterprises face while importing components from China. The initiative for the research came from the lack of similar researches, meanwhile the topic was seen to be essential after some critical incidents of 2020s which negatively affected the availability of components for certain Finnish enterprises. The objective of the research was to identify the risks related to component procurement as well as to find ways to mitigate the given risks. The research included a comprehensive theoretical overview of matters related to the researched topic. Secondary data was gathered in the form of interviews. In total six interviews were conducted, five of them being representatives of Finnish enterprises. Most of the enterprises were middle sized and those are operating in the industry of technology. With the aim of having one perspective from outside of the private sector, also the Ministry for Foreign Affairs of Finland was interviewed. It was found out that most enterprises had similar concerns regarding the risks of component procurement from China. The risks were identified to be mostly related to geopolitics which makes it difficult for the enterprises to mitigate the given risks. The results were found to vary based on the interviewed enterprise’s exposure to the risk(s). The conclusion of the research was that the risks are wider than anticipated prior conducting the research, and also not as black and white as generally assumed. The source of the risks is of challenging geopolitical situation and not necessarily related to a single nation, but the sum of multiple factors. In 2020s enterprises are required to consider geopolitics as a part of their business strategic visions