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What type of arrangement is Edgar using in his business dealings with the firms in Australia, Singapore and Dubai? Be complete with your answers.
Edgar sells its products to different parts of the world through a contractual agreement. Edgar has a strong association in Australia, Singapore and Dubai to sell its products on the market. Partnership means a relationship of two or more entities conducting business for mutual benefits and operates the business together. In partnership type in which multiple individuals, called general partners and are equally liable for its debts (BusinessDictionary, 2013). Other individuals called limited partners these are invest money but not directly involved in the management and are liable only to the extent of their investments. According to Article 4 of the Act defines a partnership between the partner has agreed to share the profits of a business carried on by all or part of them acting for all (GeminiGeek, 2013).
There will be relatively transparent trade agreement in the case of Edgar where both parties benefit them in terms of turnover. The Company is governed by an agreement between the two companies that sell products Edgar. Companies in Australia, Singapore and Dubai act as a distributors to sell the Edgar products in these countries. After reading we assume that the Edgar have one big advantage that he do not want to give any taxes to government except personal tax. This partnership deed will also promote their products are sold by parties other than their partners to arrival. This will lead to a controlled environment where the sale of its patented products to customers.
Is the Chinese business proposal a joint venture? Why or Why not? Would you recommend that Edgar accept it? Why or Why not? Yes Chinese business proposal is a joint venture. Because the Edgar wants to start business in Asian countries so at that time china is the best way to set up the business easily. And after that spread business in other Asian countries namely Korea, Japan, Pakistan and India. Start business in these countries are very big scope for setting up the business. In China, foreign investors may establish a commercial presence in one of the following methods, all foreign owned enterprise (WFOE), Representative Office or through joint ventures (JV) (Eltoma, 2012). Do the business in china is the safest, easiest, least expensive method. Good relationship with Chinese colleagues and well establish distribution system. China helps in accelerate the speed of entering the other Asian countries (TermPaperWarehouse, 2011).
The Chinese company allowing you to reduce costs, because it will help to setting a factory in China, without pocket expenses. The Chinese proposal is a good choice for Edgar the Asian market, a market with great potential. Under the terms of the agreement with Edgar 50% of profit for the companies that manufacture in China. I will definitely recommend that Edgar should go with a joint venture with a Chinese company, because Asian markets are worth the investment and reap good profits too. In my opinion, Edgar boarding enter the Asian market, after the well is located on the Asian continent. It may be withdrawn by the joint venture agreement, and start your own business and factories. Years during which the Chinese company will be able to market the company and its future possibilities that could be beneficial for a company in the long run to learn. Hence considering joint venture will be a good idea for Edgar to expand his business to all over the world.
Referring to legal challenges in chapter 7 that Edgar might face what concerns should Edgar have? * After analyze the case this case study we understand that the key issues of foreign companies operating in China face while starting the business. Companies can enter the Chinese market, several factors must be taken as they go into a partnership, and some of the tactical steps they need to take in the early stages of their Chinese operations. There are four key ways to enter the Chinese market:
* Exporting to China
* Licensing, including franchising
* Equity joint ventures
* Wholly owned foreign enterprises (WOFEs or Woofies)
The main challenges every foreign investor and Edgar faces are:
* The challenge is to become a market increasingly important for Chinese Western companies of all sizes. Despite the difficult economic climate in Europe and the United States, the Chinese economy has experienced double-digit growth in recent years. With the country for the United States to pick up as the second largest economy in 2020 and intended for the engine of global growth over the next ten years to see how large and complex the market is of vital importance for most B2B companies (Hedley, 2013).
* Transactions in foreign currencies: China has regulations on foreign currency transactions affect the money to leave the country. A foreign parent payments for services provided to a subsidiary of China may be subject to a business tax of 5%. A foreign parent payment from the company for management depends on the business tax of 5% is allowed as deductions imposed by the Chinese authorities. Interest payments and fees are subject to withholding.
* Enter the Chinese market: successfully can be an almost impossible task of foreign companies with limited or no experience of doing business seem.
The purpose of this article is to highlight some of the key challenges for foreign companies to enter the Chinese market for the first time, and to offer some practical suggestions can be integrated into society entry Chinese and expansion (Hedley, 2013).
* Restrictions on foreign exchange: The law also stipulates that projects the following net investments in foreign currencies during the duration of the project – that is, foreign exchange, foreign currency expenditures. Funds must be removed for the Edgars Yen Chinese investment by local banks, with the exception of the purchase of shares of the capital and other specific exceptions apply. If Edgar were looking for an alternative approach to doing business with the Chinese, what would you suggest? Defend your answer. Enter the Asian countries and ways of doing business with the Chinese enter Edgar options: firstly, establish a new start business in China to study and analyze the current market situation there. Setting up a new start up in china without the help of localities would prove to be senseless though. He needs to spend lot of money on just the market survey and get the right contacts. But if has a localite with him they would help him with all the hardships he faces while setting it up, infact problems can be solved in no time.
On the other hand if he is selling his products through a dealership which he was doing in countries such as Singapore, Australia and Dubai. He will be able to control his costs when it comes to selling his products in China. In this way he can monitor the market trends and evaluate his strategies accordingly.(WordPress, 2012). Therefore, before attempting to set up operations in China to focus on the Asian market, you can implement dealer / Chinese cooperation with local businesses. After checking the sales for one or two years, as the company made a profit of starting a new company in China to develop (Rpemery, 2012).
The local Chinese distributor also helps start a new business because they know the market well. This avoids confusion for sale in the country and increases the tedious tasks, such as finding the right place for the office or the purchase of machinery for the production of plants to reduce. It has the support of Chinese merchants to do business. Personally, I recommend Edgar in collaboration with a local company in China. As for the Asian market, it would be very easy for him to get the chips to sell to neighboring countries as the process itself would be a good thing for China. Edgar must begin to enter into distribution agreements with certain suppliers in China. If it is known in the chip industry can create their own Asian company to be established in China and its operations and management functions itself when it is installed in a place I know the whole culture work and local law. It would be great Edgar profitable in the long term.
GeminiGeek. (2013). Meaning Of Partnership. Retrieved from http://www.thegeminigeek.com/what-is-the-meaning-of-partnership/ Accessed 01 February, 2013
BusinessDictionary. (2013). Partnership. Retrieved from http://www.businessdictionary.com/definition/partnership.html Accessed 01 February, 2013
Eltoma. (2012). China – Key Benefits. Retrieved from http://www.eltoma-cyprus.com/pages/china-offshore-company-key-benefits.html Accessed 01 February, 2013
TermPaperWarehouse. (2011). The Advantage of Joint Ventures in China. Retrieved from http://www.termpaperwarehouse.com/essay-on/The-Advantage-Of-Joint-Ventures-In/69372 Accessed 01 February, 2013
Hedley, M. (2013). White Paper: Entering Chinese Business-to-Business Markets: The Challenges & Opportunities. Retrieved from http://www.b2binternational.com/publications/white-papers/china-market-entry/ Accessed 01 February, 2013
Rpemery. (2012). Advantages Of Joint Venture . Retrieved from http://www.rpemery.com/articles/advantages_and_disadvantages_jv.htm Accessed 01 February, 2013
WordPress. (2012). Entering A Foreigner Country .Retrieved from http://inarimedia.wordpress.com/2009/10/13/what-you-need-to-know-before-starting-a-business-in-another-country/ Accessed 01 February, 2013
Frederick, H. H., & Kuratko, D. F. (2010). Case 14.3: EDGAR’S BUSINESS. In Entrepreneurship Theory, Process, Practices (2nd Asia Pacific Edition., pp. 502–503). Australia: Cengage Learning