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    Managing Multinational Operation

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    Long-term investment projects such as electrical power generation require a thorough understanding of all attributes of doing business in that country, including import/export restrictions, labor relations, supplier financing, tax rules, depreciation schedules, currency properties and restrictions, and sources of short-term and long-term debt, to name a few. China is currently the focus of investment and market penetration strategies of multinational firms worldwide including the firm you work for. Your supervisor has asked you to gather information on some of these factors that your company or any MNE would want to consider when doing business in China.

    Use the Cybrary and other Internet sources (you might start with the web sites listed here), to collect the information.

    China Investment Trust and Investment Corporation
    ChinaNet Investment Pages

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    Solution Preview

    The purpose of the question is to make you evaluate the proposal of setting up an electrical power generation project in China. You are required to surf the net and evaluate the investment environment in that country. Specifically you are required to evaluate the government regulations, the credit situation, the labor availability and cost and the rules of finance. If you feel like you may mention the experiences of other multinational companies in China. However past experiences are fast becoming obsolete as the economic-political scenario in China is fast changing.
    <br>There are several suppositions, which the company makes; first, it assumes a static model for China. This is not supported by evidence, for example the currency pegging is there now, however, it is likely that by the time the electricity generation project is half through the restrictions may go. Second, currently the government of China is encouraging exports, however if there is the un-pegging of the currency and a free fall in the value of remnimbi then there might be restrictions on exports. Thirdly, an evaluation of the Chinese related risk factors before and after the investment is assumed to be similar. However in reality the risk factors change in ...