njsue Posted September 26, 2004 Posted September 26, 2004 You are an employee of a US firm that produces personal computers in Thailand and then exports them to the US and other countries for sale. The personal computers were originally produced in Thailand to take advantage of relatively low labor costs and a skilled work force. Other possible locations considered at the time were Malaysis and Hong Kong. The US government decides to impose punitive 100 percent and valorem tarriffs on imports of computers from Thailand to punish the country for administrative trade barriers that restrict US exports to Thailand. How do you think your firm should respond? What does this tell you about the use of targeted trade barriers?
Chef Jim Posted September 26, 2004 Posted September 26, 2004 How do you think your firm should respond? 45847[/snapback] Force all of your employees to vote for John Kerry, because he'll solve ALL these problems. Or so he says he will, not quite sure how, but that's not important now.
njsue Posted September 26, 2004 Author Posted September 26, 2004 I am voting for Kerry. Another four years of "read my lips junior" will make me absolutly sick.
Paco Posted September 26, 2004 Posted September 26, 2004 I am voting for Kerry. Another four years of "read my lips junior" will make me absolutly sick. 45856[/snapback] Sorry I can't help with this answer I can tell you that if Kerry wins, you WILL see a whole new definition of sick.
ExiledInIllinois Posted September 26, 2004 Posted September 26, 2004 Can't answer. Would never in my wildest dreams find myself in such a parasitic position... What was the Lloyd Dobbler (John Cussack) line in Say Anything? It has something to do about manufacturing, producing, etc...? Oops!
_BiB_ Posted September 26, 2004 Posted September 26, 2004 Just a thought. I'd locate to a third party country within economical shipping distance not covered by the tarriffs and relocate final assembly there. Have the bulk built in Thailand, but get maybe 10% of the work done elsewhere. Lease the facilities, to avoid capital investment. 100% is rough. If you lose 10% to shipping and say 20% to overhead, you still come out 70% ahead of staying in Thailand. The final label could say "Manufactured in India", or what ever and there wouldn't be much that could be done about it.
njsue Posted September 26, 2004 Author Posted September 26, 2004 Please keep your answers in reply to my homework ?'s. Thanks BIB for simplifying it for me.
_BiB_ Posted September 26, 2004 Posted September 26, 2004 Please keep your answers in reply to my homework ?'s. Thanks 45864[/snapback] I thought I did? Another option I would look at hard is openning up a LTD in Hong Kong and shifting the final assembly theory there. Hong kong has a corporate tax of 17%, pretty well flat and an extremely stable exchange rate ($7.80 HK to $1.00 US, and never changes). As the LTD is an independant business of the parent, the parent's profits can be paid in terms of a structured royalty. The overall profit is hit for 17% HK, but after counting the beans the parent only pays US taxes on the royalties payed out by the LTD, instead of the full amount. This should go a long way towards offsetting the increased costs of splitting the business out. Thailand has a much cheaper skilled labor force than HK. You probably wouldn't want to shift full production there as it's incredibly expensive. On a reduced production scale, it could make sense. I would also think about Shanghai, but that gets pretty political.
ExiledInIllinois Posted September 26, 2004 Posted September 26, 2004 The "slick ones" sure come out of the woodwork in threads like this? Sorry NJ... Couldn't help myself.
IUBillsFan Posted September 26, 2004 Posted September 26, 2004 You are an employee of a US firm that produces personal computers in Thailand and then exports them to the US and other countries for sale.The personal computers were originally produced in Thailand to take advantage of relatively low labor costs and a skilled work force. Other possible locations considered at the time were Malaysis and Hong Kong. The US government decides to impose punitive 100 percent and valorem tarriffs on imports of computers from Thailand to punish the country for administrative trade barriers that restrict US exports to Thailand. How do you think your firm should respond? What does this tell you about the use of targeted trade barriers? 45847[/snapback] Is this considered cheating?
njsue Posted September 26, 2004 Author Posted September 26, 2004 no just getting it broken down better for me to understand.
_BiB_ Posted September 26, 2004 Posted September 26, 2004 Oh, to answer the direct question-they can be gotten around.
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