China Wto Case Study
A wholly owned subsidiary is a company that has all of its common stock owned by a parent company. Both Joint ventures and wholly owned subsidiaries are both ventures that other businesses/companies have a controlling stake in. These types of market entry are both quite different. The ownership off Joint venture is shared by two or more companies, while wholly owned subsidiaries ownership is maintained by one parent company.
Joint ventures are less risky and the risk is equally shared, while wholly owned subsidiaries are riskier and all losses are on the parent company. The advantages of a wholly owned subsidiary are the parent company has full intro over the subsidiary company’s operations and can also meet the financial and other needs of the subsidiary company.
The parent company also all the benefits instead of sharing any profits.
The disadvantages of this type of entry are they are riskier, entry into a foreign market can be more difficult, and all the losses are on the parent company. Joint ventures are faster and less costly, while the resident partner can give them the Inside advantage depending on the resident partners relationship with the local suppliers and customers. The resident partner Is also proficient In the local language therefore taking away the language barrier. The loss is also shared between the partnering companies versus having all the loss on oneself.
The disadvantages of a Joint venture is the creation of a potential competitor in the partner, management issues can occur due to different philosophies, different expectations or the different flexibilities and willingness of the partners to evolve with the business.
2. Reflect on the Issues raised by Peter Navaho regarding the Oriental Trademarks deal. Do you agree with him? How does Stephen Rollins view the partnership? In your opinion, should Trademarks have gone ahead with the partnership? Why or why not?
We agree with Peter Navaho, the Chinese are taking over our technology, Jobs, and companies while putting a big dent into our economy. We believe globalization Is a good thing, but to sign over our technology and control to a foreign company Is casuals ten unlace states to lose technology Ana power. I nee transfer AT technology allows for potential competitors to take over an industry by using that technology to lid cheaper products with unethical working conditions, nonexistent environmental restraints, and using that technology to build a more powerful military.
Stephen Rollins views the Joint venture restrictions as agreed upon restrictions with the United States when China entered the WTFO. Companies are not forced into joint ventures because 75 percent of the investments into China is a wholly owned enterprise. He believes the President of the United States should push to reduce some of the restrictions with China, but US companies are doing well with the restrictions in place now. We do not think Dream Works should have gone ahead with the partnership.
The transfer of the technology to a country that is known for using our technology to create competition is not a smart move. There are advantages too partnership with China such as the distribution capabilities, but to agree to the terms of giving away your technology, the heart and soul of your company, is a poor decision and in the long run Dream Works will lose out.
3. Consider the allegations by Peter Navaho that China is responsible for the economic problems that currently challenge the United States. In your opinion, is he on the right track?
The US International Trade Commission estimated a $48 billion and 2. 1 million Jobs lost in 2009 due to piracy and counterfeiting of US intellectual property. Giving them our technology is costing us money and Jobs, while our trade deficit with China continues to grow.
Our exports to China continue to decrease at the same time the imports from China increase and this is due partially to them using our technology to create competition. 4. Why does the World Trade Organization allow countries to maintain restrictions on media?
How do these restrictions affect how companies operate? The WTFO is trying to prevent heavy restrictions on media especially in China whose bootleg DVD industry created over $6 billion last year and the box offices only created $1. 2 billion. They do allow some restrictions in order to prevent a countries market from being completely taken over.
Companies are less willing to partner up in a Joint venture when there are many restrictions in place. The fewer the restrictions countries are allowed to impose, the more flexible incoming companies can be and with negotiations.