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China as Textile Manufacturing Destination

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You are the assistant to the CEO of a small textile firm that manufactures high quality premium priced, stylish clothing. The CEO has decided to see what the opportunities are for manufacturing the product in China and has asked you for advice as to the steps the company should take.

What advice would you give him?

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The response addresses the queries posted in 478 words with references.

//Before writing about the advice for the destination of Textile manufacturing, it is essential to have knowledge about the 'Benefits of Globalization'. One should know about the opportunities offered by Globalization, which further will aid in the analysis of business opportunity effectively, in the selected Country that is China.//


Globalization has lead to the progressive integration of various national economies and broke down the financial and trade flow barriers all round the world. This has given the companies an opportunity to operate world widely in the areas providing maximum returns (Sharan, 2003). China is assumed to be the next economic super power after US and Japan. It stands as the 7th strongest economy in the world, with a per capita income of $750 and ...

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Factors that should determine the appropriate required return on this investment opportunity in China.

China is fast becoming a manufacturing superpower. High-tech companies, such as computer chip manufacturers, and low-tech companies, such as textile manufacturers, have built manufacturing facilities in China. Assume that you are CFO of an automobile manufacturer looking to build a $400 million (U.S.) plant in China. Discuss the factors that should determine the appropriate required return on this investment opportunity.

Your discussion about China should begin with a clear logical explanation of the theory behind the concept of "required return."

1. Is it possible to make a reasonably accurate estimate of the required return?
2. Make an estimate of the required return, starting with a 12% weighted average cost of capital for the U.S. auto manufacturer, and adding reasonable estimated percentages for each of the separate risk elements you can foresee.

More info on China: http://www.heritage.org/research/features/index/country.cfm?id=China

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