Introduction

In Japan-China relations, Japanese businesses in China have for years expressed concerns about how political crises affect their ability to conduct profitable business even as they manage the risks. This chapter introduces the political risk management strategies Japanese multinationals use. Using unique firm-level quantitative data and narrative interviews, the book analyzes the three major strategies firms use: exit (leaving the China market), voice (political or social lobbying), and loyalty (protecting the firm’s interests by minimizing its political profile). The strategies a firm uses depend on two factors: the risk perception of managers and the degree of damages the company suffers in the aftermath of a political crisis.