Explain,why do you think that Decko Co. established the subsidiary in China instead of Japan?

Project description
Decko Co. is a U.S. firm with a Chinese subsidiary that produces cell phones in China and sells them in Japan. This subsidiary pays its wages and its rent in Chinese yuan, which is stable against the dollar. The cell phones sold to Japan are denominated in Japanese yen. Assume that Decko Co. expects that the Chinese yuan will continue to stay stable against the dollar.
Please answer the following questions:
1-The subsidiarys main goal is to generate profits for itself and it reinvests the profits. It does not plan to remit any funds to the U.S. parent:
a-Assume that the Japanese yen strengthens against the U.S. dollar over time. How would this be expected to affect the profits earned by the Chinese subsidiary?
b-If Decko Co. had established its subsidiary in Tokyo, Japan instead of China, would its subsidiarys profits be more exposed or less exposed to exchange rate risk?
c-Why do you think that Decko Co. established the subsidiary in China instead of Japan? Assume no major country risk barriers.
d-If the Chinese subsidiary needs to borrow money to finance its expansion and wants to reduce its exchange rate risk, should it borrow U.S. dollars, Chinese yuan, or Japanese yen?
2-China has kept the yuan undervalued by anywhere from 1540%, depending upon the research that has been done. It has done this to keep its currency weaker than it might otherwise be. Do you think the United States should attempt to do the same thing with the value of the dollar (e.g., causing it to weaken verus the yuan)? Why or why not

Place a similar order with us or any form of academic custom essays related subject and it will be delivered within its deadline. All assignments are written from scratch based on the instructions which you will provide to ensure it is original and not plagiarized. Kindly use the calculator below to get your order cost; Do not hesitate to contact our support staff if you need any clarifications.

Type of paper Academic level Subject area
Number of pages Paper urgency Cost per page:
 Total:

Whatever level of paper you need – college, university, research paper, term paper or just a high school paper, you can safely place an order.

Page Navigation