International Corporate Finance - Essay Example

A comparative analysis of the pros and cons of doing business in both of the countries has also been provided, along with recommendations on the market that the Flying Wombat should target. An appendix is present for easy reference and a bibliography is also present at the end of the report. NOTE: In order to fully grasp the concept of the paper the researcher felt it important to include the profiles of the countries under discussion. However, to prevent plagiarism it is important to state that the profile of China has been taken (in its full form) from the National Geographic site.

The source has been given at the end. "China is the world's most populous country with about 1.3 billion people. China's geography is highly diverse, with hills, plains, and river deltas in the east and deserts, high plateaus, and mountains in the west. Climate is equally varied. China has the world's longest continuous civilization; for more than 40 centuries its people created a culture with strong philosophies, traditions, and values. China remains a predominantly rural society, with only 39 percent living in urban areas.

The first half of the 20th century saw the fall of the last Chinese emperor, Japanese invasion, World War II, and civil war between Chinese Communist and Nationalist forces. The People's Republic of China from 1949 to 1976 imposed state control on the economy. Since 1979, China has reformed its economy and allowed competition, and today has the world's highest rate of growth. China has seven of the world's ten most polluted cities. The largest producer and consumer of coal, the country is turning away from coal toward clean hydroelectric resources.

Politically it still maintains strict control over its people. Chinese rule over Tibet remains controversial, fighting with Muslim separatists in Xinjiang continues, and political issues with Taiwan remain unresolved. China regained Hong Kong from Britain in 1997 and Macau from Portugal in 1999. In 2003 China became only the third nation (after Russia and the U.S.) to launch a manned space flight, with plans to reach the moon by the year 2010" (The China Country Profile has been taken from the National Geographic site, (http://www3.

nationalgeographic.com/places/countries/country_china.html). Political Risks in ChinaVan der Putten (2003) has stated that, foreign investors in China need to be aware of the following risks associated with doing business in the country; Corporate social responsibility (CSR) is also known as labor risk. Labor risks include forced labor, suppression and the existence of inaccurate labor regulations. All of these factors can adversely affect businesses and it is mandatory that foreigners are aware of them.

In addition, van der Putten (2003) states that labor issues and multinational organizations are often in the limelight over international matters. Concerns such as these can result in damage to the reputation of the foreign firm as well as boycott by the