Question: 3-1: Identify three compelling economic reasons to invest in China. Then identify three compelling political reasons to avoid doing so. Recommend a criterion one could use to trade o the opportunities of operating in China versus the riss of doing so. !ns"er: Three compelling economic reasons to invest in China. Businesses see stunning opportunities like, #aret $otential: $otential: With 1.34 billion citizens #aret $erformance: Rapid $erformance: Rapid economic development catapulted China rom an also!ran in 1"#$ to the %orld&s second largest econom' in ($1(, Infrastructure:: )n a multi'ear program, China is investing trillions on housing, o*ces, high%a's, airports, Infrastructure seaports, %ater%a's, dams, po%er grids, high!speed trains and communication net%orks. Resources: China&s Resources: China&s %ell!educated population creates an immense pool o productive labor. Wage rates or unskilled labor are less those in man' other countries. %trategic $ositioning: $ositioning: China represents the biggest gro%th opportunit' in the histor' o capitalism. +he countr' is eperiencing roughl' ten times the economic acceleration, on more than 1$$ times the scale, resulting in an economic transormation that carries over 1,3$$ times the orce o change than seen during the )ndustrial Revolution. Three compelling political reasons to avoid investment in China. China practices -tate Capitalism/ %hereb' the govern government ment manipulates market activities to achieve political goals. Conse0uentl', 2s doing business in China oten nd themselves at a disadvantage. Western rms purchased big stakes in Chinese companies. 5olitical problems and legal di*culties short! circuited their plans. ventuall', like man' others, the' sold their stakes and reset their strategies. 5olitical risk is the likelihood that political decisions, events, or conditions %ill a6ect a countr'&s business environment in %a's that, 1. Cos Costt investor investors s some some or all all o the the value value o o their their investme investments, nts, (. 7o 7orce rce them them to accept lo%er lo%er!tha !than!pr n!pro8e o8ected cted rates rates o return, return, and and 3. +hr +hreate eaten n the sust sustaina ainabili bilit' t' o loc local al activ activitie ities. s. • •
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Question: 3-&: 'hat sort of operational safeguards "ould you advise a company to adopt in order to (etter manage the riss of China)s legal environment* !ns"er !ns "er:: China practices -tate Capitalism/ %hereb' the government manipulates market activities to achieve political goals. Conse0uentl', 2s doing business in China oten nd themselves at a disadvantage. Western rms purchased purcha sed big stakes in Chinese companies. 5olitical 5olitical problems and legal di*culties short!circuited short!circuited their plans. ventuall', like man' others, the' sold their stakes and reset their strategies. 5olitical risk is the likelihood that political decisions, events, or conditions %ill a6ect a countr'&s business environment in %a's that, Cost investors some or all o the value o their investments, 7orce them to accept lo%er!than!pro8ected rates o return, and +hreaten +hrea ten the sustainabilit' sustainabilit' o local activities. activities. • • •
Question: 3-3: Collectivism and individualism+ democracy democracy and totalitarianism+ rule of la" and rule of man: 'hat do these concepts say a(out I$Rs and the legitimacy of protection* !ns"er: +heore !ns"er: +heoretical tical positions positions can be be used to take take a position position on the issue issue o protection protection but but the realit' realit' still remains remains that no region o the %orld is eempt rom pirac' and in ($$" it continued to rise. +he pervasiveness and tenacit' o sot%are pirac' shines a light on the most basic issues such as the accepted legitimac' o pirac'. ven %ith increased criminalization and transnational institutions ocusing on pirac', it has not slo%ed. Question: 3-,: 'hat is the relationship among among governments+ transnational institutions+ and #s /ghting piracy* 0o they share similar or dierent motivations* !ns"er: +echnicall', !ns"er: +echnicall', the standards o sot%are pirac' are une0uivocal. +hus, parties have been hopeul that collective political arrangements and legal actions b' companies, associations, governments, and institutions %ould lead to a decline in global sot%are pirac'. 9o%ever, coordinated anti!pirac' initiatives such as high!prole legal proceedings against companies using illegal sot%are, increased government cooperation in providing legal protection or intellectual propert', and the criminalization o sot%are pirac' have proven to be largel' ine6ective. ven e6orts at the transnational level to get nations to sign treaties and to re0uire them to protect and enorce intellectual propert' rights according to global, not local, standards have not 'ielded the desired results. nortunatel', the ease %ith %hich sot%are can be duplicated, sold, and distributed continues to ba;e the industr'. Question: 3-: Can #s stop piracy "ithout government government help* 'hy "ould they prefer greater government assistance* 'hy "ould they oppose it* !ns"er: ) !ns"er: ) the sot%are industr' could successull' develop technical and business measures to th%art countereiters, government intervention %ould be unnecessar'. +hus ar, the industr'&s best e6orts have been unsuccessul.
Question: 3-2: 0o you thin consumers in "ealthier countries versus those in poorer countries ustify piracy "ith similar rationali4ations* 'hy* !ns"er: Consumers in high thet countries tend to share a collectivist mindset= the' see propert' as being common to all and eisting or the benet o all>oten the' do not understand the basic concept o intellectual propert' rights. ?s %ith man' other products, the' %ant to ac0uire them at the lo%est possible cost. @n the other hand, consumers in lo%er thet countries tend to share an individualist mindset= the concept o intellectual propert' rights is %ell understood and long established %ithin their countries and cultures. )5Rs are seen to be a necessit' or economic development and gro%th= ro'alties and prots are seen as the 8ust ruits o creativit' and investment. Question: 3-5: Can you envision a scenario "here developers and consumers of I$ develop a relationship that eliminates the pro/ta(ility of piracy* !ns"er: ? great eample that can serve as a basis or discussion is the evolution o music pirac'. 2apster and other sites %ere eventuall' shut do%n or making illegal pirac' o music available. Consumers %ill nd %hat the' %ant and use it oten even i it is illegal. +he industr' solved the problem %ith alternative technolog' that beneted both the companies and the consumers, or eample i+unes. Consumers are %illing to pa' the "" cents or the benet and availabilit' o a song. o %hen the conditions are right or both the companies and the consumers, solutions that protect )BRs can be agreed upon.
