Your corporation has an opportunity to make a major investment in China of $100

Question

Your corporation has an opportunity to make a major investment in China of $100 million to develop an offshore manufacturing facility. When this plant is fully developed and becomes operational in two years the corporation can close down its current manufacturing facility in the United States and shift operations to China. At present, the expected annual savings in labor and benefit cost is expected to be $20 million. You are asked to develop a proposal to identify the potential risk of this proposal and

Explanation / Answer

What are the inherent risks in this opportunity?

Solution-

The lending or depositing funds or doing other financial transaction in particular country have wide range of the risk associated. This includes currency blockage, economic risk and inadequate access to hard currencies.

What economic data would you need for your analysis? Why (How would you use them)?

Solution-

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