Question
According to the article below answer the following question: Determine if Kirin or Toyota are more exposed to political risk in Myanmar. How would the
According to the article below answer the following question:
Determine if Kirin or Toyota are more exposed to political risk in Myanmar. How would the political risk assessment be different for Kirin's and Toyota's subsidiaries in Myanmar? Explain your answer using the information provided in the article excerpt. [10 marks]
Article:
Myanmar coup fails to deter Japanese business
Financial Times, 24 February 2021
Just four days after Aung San Suu Kyi's civilian government was toppled, the Japanese brewer Kirin decided to quit a joint venture with ties to the military. The conclusion, reached at an emergency meeting, was swift and unanimous. "It was no longer tenable. I had to make a decision fast," said Yoshinori Isozaki, chief executive of Kirin, one of Myanmar's largest foreign investors. According to executives and experts, however, Kirin had to act as its business had direct ties to the Tatmadaw, Myanmar's military, which has been censured domestically and internationally for nullifying a democratic election.
But for most other Japanese companies in Myanmar, it is business as usual as tens of thousands of civil servants, transport workers, medical staff and others protest against the military. "While keeping a close eye on the situation and hoping for a rapid resolution, many Japanese companies are staying calm and carrying on with their operations," said Kazufumi Tanaka, managing director of the Japan External Trade Organization's office in Yangon.
Unlike the many Japanese companies that have set up local plants, Kirin acquired a 55 per cent stake in Myanmar Brewery, the country's top beer producer, for $560m in 2015 and later spent $4.3m for a majority stake in Mandalay Brewery. The partner in both ventures is the military-run Myanmar Economic Holdings Public Company (MEHL). Even before the coup, Kirin was under pressure from activists to review its operations in Myanmar after an investigation failed to uncover where proceeds from the beer ventures ended. The military has been accused of crimes against humanity for atrocities against Rohingya Muslims and other minorities. Kirin has stressed it is not pulling out of Myanmar and is seeking a local, non-military partner to buy MEHL's stake. But analysts said it was unclear whether the military would let go of its deal.
Yet many other Japanese investors have no links with the military, and having invested in offices, factories or power plants, intend to keep operating. Investors include big trading houses such as Sumitomo, which is involved in power, logistics and telecoms; carmakers Toyota and Suzuki, which have built local factories; property developers, food producers and clothes makers. Daiwa Securities played a key role in creating the Yangon Stock Exchange. The US announced sanctions against the coup generals and three military linked companies, with other western nations likely to follow suit. But that will not hit foreign investors and wider sanctions might be manageable as few Japanese companies export from Myanmar.
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