A Study On The Strategies Of Political Risk Response In International Project Contracting

With continued efforts in "Going Out Strategy" and "Belt and Road Initiative",more and more Chinese contracting enterprises enter the international construction market.They not only expand their business areas,but also update their business models.However,the enterprises are confronted with increasingly political risk since our projects are mainly located in poor developing countries and regions.Financial crisis and the international political situation also pose threats to the enterprises.It is quite impossible for the enterprises to cope with the political risk on their own.Thus,both governments and enterprises should strengthen their awareness of political risk management and improve the ability and strategies of coping with political risk.This paper discusses the basic theory of coping with political risk in the international construction project,and concludes the contents of political risk,political risk management and methods of coping with political risk through the method of literature review.Then,from the perspective of the main roles who coping with political risk,the paper demonstrates the limitation of the SOE and the necessity of government to join in political risk management.Besides,the paper also analyzes the relations between government and enterprises in coping with political risk.Next,through the case study method,the paper analyzes and concludes political risk confronted by our enterprises in three examples.The paper further researches the current situation of political risk management of government and enterprises.On this basis,the paper puts forward the weakness of government and enterprises in coping with political risk.Moreover,through the method of questionnaire investigation,the paper analyzes the key factors in strategies of coping with political risk,and divides the factors into three parts-political risk coping system,process and insurance application.According to the degree of importance in questionnaire,the paper chooses following systems for further research,namely the organizing system,evaluating system,staff training system and emergency settlement system.The paper also defines coping process as supervising alarming,response handling and recovery claiming.The paper further researches application of political risk insurance by enterprises in terms of their practice.Finally,through analyzing the weakness of government in coping with political risk and the key factors of coping strategies,the paper puts forward several suggestions in coping with political risk in terms of government and enterprises:The government should establish relevant laws,strengthen communication and cooperation with other countries,improve overseas investment insurance system,speed up the establishment of information service platform.Meanwhile,the enterprises should establish political risk management system,clarify political risk coping process,properly utilize political risk insurance and strengthen cooperation with other parties.