跨国财务管理16章课件

1Part5FinancialmanagementofMNCSChapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapter17InternationalCapitalStructureandtheCostofCapitalChapter18InternationalCapitalBudgetingChapter19MultinationalCashManagementChapter21InternationalTaxEnvironment1Part5Financialmanagemento2Chapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapterObjective:

ThischapterdiscussesvariousissuesassociatedwithforeigndirectinvestmentsbyMNCs,whichplayakeyroleinshapingthenatureoftheemergingglobaleconomy.2Chapter16ForeignDirectInv3Chapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapteroutlines:GlobalTrendsinFDIWhyDoFirmsInvestOverseas?Cross-BorderAcquisitionsPoliticalRiskandFDI3Chapter16ForeignDirectInv4KeywordsFDIflowsFDIstocksGreenfieldinvestmentCross-bordermergersandacquisitionsIntangibleassetsProductlife-cycletheory无形资产跨国并购绿地投资对外直接投资流量对外直接投资存量产品生命周期理论4KeywordsFDIflows无形资产跨国并51.GlobalTrendsinFDIFirmsbecomemultinationalwhentheyundertakeforeigndirectinvestments（FDI).FDIisinvestmentinaforeigncountrythatgivestheMNCameasureofcontrol.51.GlobalTrendsinFDIFirms61.1TwotypesofFDIGreenfieldInvestmentFDIofteninvolvestheestablishmentofnewproductionfacilitiesinforeigncountriessuchasHonda’sOhioplant.Cross-BorderAcquisitionFDImayalsoinvolvemergersandacquisitionsofexistingforeignbusinesses.AnexampleisprovidedbyFord,whichrecentlyacquiredeffectivecontrolofMazda,aJapanesecarmanufacturer,aswellasJaguar,aBritishautomobilecompany.61.1TwotypesofFDIGreenfie71.2FDIflowsandFDIstocksTheFDIoutflowin2006was$1215.8billion.TheFDIinflowin2006was$1305.9billion.FDIstocksaretheaccumulationofpreviousFDIflows,whichwas$12474.3billionin2006.71.2FDIflowsandFDIstocksTAverageAnnualFDI(inBillionsUSD)2002-200616-8AverageAnnualFDI(inBillion91.3China’sFDIflows91.3China’sFDIflows102.WhyDoFirmsInvestOverseas?Whydofirmslocateproductionoverseasratherthanexportingfromthehomecountryorlicensingproductiontoalocalfirminthehostcountry?TradeBarriersImperfectLaborMarketsIntangibleAssetsVerticalIntegrationProductLifeCycleShareholderDiversificationService102.WhyDoFirmsInvestOvers111.1TradeBarriersGovernmentsmayimposetariffs,quotas,andotherrestrictionsonthefreeflowofgoods,servicesandpeople.Sometimes,governmentsmayevenimposecompletebanstotheinternationaltradeofcertainproducts.111.1TradeBarriersGovernm122.1TradeBarriersFacingbarrierstoexportitsproductstoforeignmarkets,afirmmaydecidetomoveproductiontoforeigncountriesasameansofcircumventingthetradebarriers.AclassicalexampleisHonda.SincethecarsproducedinOhiowouldnotbesubjecttoU.S.tariffsandquotas,HondacouldcircumventthesebarriersbyestablishingproductionfacilitiesintheU.S..122.1TradeBarriersFacingba132.2LaborMarketImperfectionsAmongallfactormarkets,thelabormarketistheleastperfect.Ifthereexistrestrictionsontheflowofworkersacrossborders,thenlaborservicescanbeunderpricedrelativetoproductivity.TherecentsurgeinvestmentinChinacanbeattributable,inpart,tothehighlyproductive,low-costworkforcesinChina.刘植荣：世界工资研究报告132.2LaborMarketImperfectioLaborCostsaroundtheGlobe(2006)CountryAverageHourlyCost($)CountryAverageHourlyCost($)Germany$34.21Japan$20.2Belgium$31.85Spain$18.83Sweden$31.8Korea$14.72UK$27.1Israel$12.98Australia$26.14Taiwan$6.43Canada$25.74HongKong$5.78Italy$25.07Brazil$4.91France$24.9Mexico$2.75US$23.82Philippines$1.07China$0.6716-14LaborCostsaroundtheGlobe(152.3IntangibleAssetsMNCsoftenenjoycomparativeadvantagesduetospecialintangibleassetstheyposses.Examplesincludetechnological,managerial,andmarketingknow-how,superiorR&Dcapabilities,andbrandnames.Sincethepropertyrightsinintangibleassetsaredifficulttoestablishandprotect,especiallyinforeigncountrieswherelegalrecoursemaynotbereadilyavailable.Coca-Colahasaveryvaluableassetinitscloselyguarded“secretformula”.Toprotectthatsecretformula,Coca-ColahaschosenFDIoverlicensing.152.3IntangibleAssetsMNCsof162.4VerticalIntegrationMNCsmayundertakeFDIincountrieswhereinputsareavailableinordertosecurethesupplyofinputsatastableprice.Verticalintegrationmaybebackwardorforward:Backward:involveanindustryabroadthatproducesinputsforMNCs,e.g.afurnituremakerbuyingaloggingcompany.Forward:involveanindustryabroadthatsellaMNC’soutputs,e.g.aU.S.automakerbuyingaJapaneseautodealership.162.4VerticalIntegrationMNCs172.5ProductLifeCycleNewproduct:U.S.firmsdevelopnewproducts,suchascomputers,televisionsandmass-producedcars,andfirstmarketedinthedomesticmarket,andthenmarketsexpandoverseas.Maturingproduct:FDItakesplacewhenproductreachesmaturityandcostbecomesanimportantconsiderationfortheMNC.Standardizedproduct:importedfromoverseas.172.5ProductLifeCycleNewpr182.5ProductLifeCycleQuantityQuantityTheU.S.LessadvancedcountriesproductionNewproduct Maturingproduct StandardizedproductNewproduct Maturingproduct Standardizedproductexportsconsumptionconsumptionimportsproductionimportsexports182.5ProductLifeCycleQuanti192.5ProductLifeCycleItshouldbenotedthattheProductLifeCycletheorywasdevelopedinthe1960swhentheU.S.wastheunquestionedleaderinR&Dandproductinnovation.IncreasinglyproductinnovationsaretakingplaceoutsidetheUnitedStatesaswell,andnewproductsarebeingintroducedsimultaneouslyinmanyadvancedcountries.Productionfacilitiesmaybelocatedinmultiplecountriesfromproductinception.192.5ProductLifeCycleItsho202.6ShareholderDiversification

servicesFirmsmaybeabletoprovideindirectdiversificationtotheirshareholdersifthereexistssignificantbarrierstothecross-borderflowofcapital.CapitalMarketimperfectionsareofdecreasingimportance,however.Managerscanthereforeprobablynotaddvaluebydiversifyingfortheirshareholdersastheshareholderscandosothemselvesatlowercost.202.6ShareholderDiversificat21KeywordsPoliticalriskcountryriskInternalizationtheoryOverseasPrivateInvestmentCorporationSynergisticgains利润增值效应内部化理论政治风险海外私人投资公司国家风险21KeywordsPoliticalrisk利润增值效3.Cross-BorderMergers&AcquisitionsGreenfieldInvestmentBuildingnewfacilitiesfromthegroundup.Cross-BorderAcquisitionPurchaseofexistingbusiness.Cross-BorderAcquisitionrepresents40-50%ofFDIflows.Cross-borderacquisitionsareapoliticallysensitiveissue:Greenfieldinvestmentisusuallywelcome.Cross-borderacquisitionisoftenunwelcome.16-223.Cross-BorderMergers&Acqu234.PoliticalRiskandFDIUnquestionablythisisthebiggestriskwheninvestingabroad.“Doestheforeigngovernmentupholdtheruleoflaw?”Abigsourceofriskisthenon-enforcementofcontracts.Politicalriskreferstothepotentiallossestotheparentfirmresultingfromadversepoliticaldevelopmentsinthehostcountry.234.PoliticalRiskandFDIUnq244.1PoliticalRiskDependingontheincidence,politicalriskcanbeclassifiedinto:MacroRiskAllforeignoperationsareaffectedbyadversepoliticaldevelopments.MicroRiskSelectedforeignoperationsareaffectedbyadversepoliticaldevelopments.244.1PoliticalRiskDepending254.1PoliticalRiskDependingonthemannerinwhichfirmsareaffected,politicalriskcanbeclassifiedinto:TransferRiskUncertaintyregardingcross-borderflowsofcapital,payment,andthelike.OperationalRiskUncertaintyregardinghostcountriespoliciesonfirm’soperations.ControlRiskUncertaintyregardingownershipandcontroloflocaloperations.254.1PoliticalRiskDepending264.2MeasuringPoliticalRiskThehostcountry’spoliticalandgovernmentsystem.Acountrywithtoomanypoliticalpartiesandfrequentchangesofgovernmentisrisky.Trackrecordsofpoliticalpartiestheirrelativestrength. Ifthesocialistpartyislikelytowinthenextelection,watchout.264.2MeasuringPoliticalRisk274.2MeasuringPoliticalRiskIntegrationintotheworldsystem.NorthKorea,Iraqareexamplesofisolationistcountriesunlikelytoobservetherulesofthegame.Ethnicandreligiousstability.DomesticpeacecanbeshatteredbyEthnicandreligiousconflicts,causingpoliticalriskforforeignbusiness.274.2MeasuringPoliticalRisk284.2MeasuringPoliticalRiskRegionalsecurityRealandpotentialaggressionfromaneighboringcountryisobviouslyamajorsourceofpoliticalriskKuwaitisaniceenoughcountry,butit’sinaroughneighborhood.KeyeconomicindicatorsPoliticalriskisnotentirelyindependentofeconomicrisk.284.2MeasuringPoliticalRisk294.3HedgingPoliticalRiskGeographicdiversificationSimplyput,don’tputallofyoureggsinonebasket.MinimizeexposureFormjointventureswithlocalcompanies.JoinaconsortiumofinternationalcompaniestoundertakeFDI.Financeprojectswithlocalborrowing.294.3HedgingPoliticalRiskGe304.3HedgingPoliticalRiskInsuranceTheOverseasPrivateInvestmentCorporation(OPIC)aU.S.governmentfederallyownedorganization,offersinsurance.304.3HedgingPoliticalRiskI31Questions1.JapaneseMNCs,suchasToyota,Toshiba,Matsushita,etc.,madeextensiveinvestmentsintheSoutheastAsiancountrieslikeThailand,MalaysiaandIndonesia.Inyouropinion,whatforcesaredrivingJapaneseinvestmentsintheregion?31Questions1.JapaneseMNCs,s32AnswersMostlikely,theseJapaneseMNCshaveinvestedheavilyinSoutheastAsiainordertotakeadvantageofunderpricedlaborservicesandcheaperlandandotherfactorsofproduction.32AnswersMostlikely,these33Questions2.HowwouldyouexplainthefactthatChinaemergedasthethirdmostimportantrecipientofFDIaftertheUnitedStatesandtheUnitedKingdominrecentyears?33Questions2.Howwouldyouex34AnswersChinaattractedagreatdealofFDIrecentlybecauseforeignfirmswantto(I)takeadvantageofinexpensivelaborandresources,andalso(ii)gainaccesstotheChinesemarketthatisoftennotaccessibleotherwise.34AnswersChinaattractedagre35Questions3.ExplainVernon’sproductlife-cycletheoryofFDI.Whatarethestrengthandweaknessofthetheory?Answer:Accordingtotheproductlife-cycletheory,firmsundertakeFDIataparticularstageinthelife-cycleoftheproductsthattheyinitiallyintroduced.Whenanewproductisintroduced,thefirmchoosestokeepproductionathome,closetocustomers.Butwhentheproductbecomematureandforeigndemandsdevelop,thefirmmaybeinducedtostartproductioninforeigncountries,especiallyinlow-costcountries,toservethelocalmarketsaswellastoexporttheproductbacktothehomecountry.35Questions3.ExplainVernon’s36AnswersＴheproductlife-cycletheorycanexplainhistoricaldevelopmentofFDIquitewell.Inrecentyears,however,theinternationalsystemofproductionhasbecometoocomplicatedtobeexplainedneatlybythelife-cycletheory.Forexample,newproductsareoftenintroducedsimultaneouslyinmanycountriesandproductionfacilitiesmaybelocatedinmanycountriesatthesametime.36AnswersＴheproductlife-cycl37Questions4.Whydoyouthinkthehostcountrytendstoresistcross-borderacquisitions,ratherthangreenfieldinvestments?37Questions4.Whydoyouthink38AnswersThehostcountrytendstoviewgreenfieldinvestmentsascreatingnewproductionfacilitiesandnewjobopportunities.Incontrast,cross-borderacquisitionscanbeviewedasforeigntakeoverofexistingdomesticfirms,withoutcreatingnewjobopportunities.Andmostcountriesprefertoretainlocalcontrolofdomesticfirms.38AnswersThehostcountrytend39Questions5.Definecountryrisk.Howisitdifferentfrompoliticalrisk?Answer:Countryriskisabroadermeasureofriskthanpoliticalrisk,astheformerencompassespoliticalrisk,creditrisk,andothereconomicperformances.39Questions5.Definecountry40Questions6.WhatfactorswouldyouconsiderinevaluatingthepoliticalriskassociatedwithmakingFDIinaforeigncountry?40Questions6.Whatfactorswo41AnswersFactorstobeconsideredinclude:thehostcountry’spoliticalandgovernmentsystem;trackrecordofpoliticalpartiesandtheirrelativestrength;thedegreeofintegrationintotheworldsystem;thehostcountry’sethnicandreligiousstability;regionalsecurity;keyeconomicindicators.41AnswersFactorstobeconside1.Undera1981VoluntaryTradeAgreementJapaneseautomobilemanufacturerswerenotallowedtoincreasetheirexportstotheU.S.market.Asaresult:a)Theyexitedthemarketb)Hondawasmotivatedtocircumventthetradebarriers.c)Honda’sFDImayhavebeenpartofanoverallcorporatestrategydesignedtobolstertheircompetitivepositionvis-à-vistheirdomesticrivalssuchasToyotad)Bothb)andc)42Answer:d1.Undera1981VoluntaryTrade2.Honda’sdecisiontobuildaplaninOhioa)WaswelcomedbytheUnitedAutoWorkersb)WasencouragedbyassistancefromthestateofOhio,includingimprovedinfrastructurearoundtheplantandabatementofpropertytaxes.c)InvolvedsettingupaspecialforeigntradezonethatallowedHondatoimportautopartsfromJapanatareducedtariffrate.d)Alloftheabove43Answer:d2.Honda’sdecisiontobuilda3.WhenfirmsundertakeFDI,a)TheybecomeMNCsb)Theyreducetheirtaxratesincetheycantelleachcountrythattheydobusinessinthattheypaidtheirtaxesinothercountries.c)Thecanexploitworkersbypayingthembelow-marketwagesindepreciatingcurrencies.d)Alloftheabove44Answer:a3.WhenfirmsundertakeFDI,44A4.TheFordMotorCompanyrecentlyacquiredMazda,aJapaneseautomaker,andJaguar,aBritishautomaker.a)Thisisanexampleofcross-borderM&Ab)ThiswasaGreenfieldinvestmentc)Botha)andb)d)Noneoftheabove45Answer:a4.TheFordMotorCompanyrecen5.JapanplaysamajorroleasanexporterofFDI.AsarecipientofFDIa)JapanreceivesasmuchFDIasitexports,makingitamajorplayeronbothfronts.b)Japanplaysarelativelyminorrole,reflectingavarietyoflegal,economic,andculturalbarrierstoFDI.c)Japan’sreceiptsofFDIarethirdintheworldd)Noneoftheabove46Answer:b5.Japanplaysamajorroleas6.ThethirdmostimportanthostcountryforFDIisa)TheUnitedStatesb)Japanc)Chinad)Mexico47Answer:c6.Thethirdmostimportanthos7.MNCshaveinvestedinChinaa)Bylowermaterialcosts.b)Bylowerlaborcosts.c)ByadesiretopreempttheentryofrivalsintoChina’spotentiallyhugemarket.d)Alloftheabove48Answer:d7.MNCshaveinvestedinChina48.FDIstocksa)Arethecommonsharesofmultinationalcompaniesthatinvestabroadb)AremutualfundsthatinvestinFDI c)Representtheaccumulationofpreviousyear’sFDIflowsd)AtthesumtotalofcurrentyearFDIflows49Answer:c8.FDIstocks49Answer:c9.thekeyfactorsthatareimportantinafirm’sdecisiontoinvestoverseasare:a)Tradebarriers,imperfectlabormarket,andintangibleassetsb)verticalintegration,productlifecycle,andshareholderdiversificationservicesc)profitmaximization,globalprestige,andcompetitiond)a)andb)50Answer:d9.thekeyfactorsthatareimp10.Whydofirmslocateproductionoverseasratherthanexportingfinishedgoods?a)costsb)Firmsseektoextendcorporatecontroloverseasc)Imperfectfactormarketsd)Alloftheabove51Answer:d10.Whydofirmslocateproduct11.Whydogovernmentsregulateinternationaltrade?a)Toraiserevenueb)Protectdomesticindustriesc)Pursueothereconomicobjectivesd)Alloftheabove52Answer:d11.Whydogovernmentsregulate12.Laborservicesinacountrymightbeunderpricedrelativetoproductivitybecause:a)Workersarenotallowedtofreelymoveracrossnationalboundariestoseekhigherwages.b)Somecountriesdoabadjobofeducatingtheirworkforce,consequentlytheyarenotveryproductivec)Insomecountriesthereisashortageofcapitalinvestment.d)Alloftheaboveareequallyimportant53Answer:a12.Laborservicesinacountry13.Severeimperfectionsinthelabormarketarisefromimmobilityofworkersduetoimmigrationbarriers.Asaresponse,firmsshouldconsidera)Movingtotheworkers.b)Movingtocountrieswherelaborservicesarethelowestinabsoluteterms.c)Movingtocountrieswherelaborservicesareunderpricedrelativetoproductivity.d)Hiringillegalimmigrants.54Answer:c13.Severeimperfectionsinthe14.Coca-Colahasinvestedinbottlingplantsallovertheworldratherthanlicensinglocalfirmsa)Becausetheforeignerscan’tbetrustedtofollowthesecretrecipe.b)BecauseCoca-Colawantedtoprotecttheformulaforitsfamoussoftdrink.c)BecauseoftheinternalizationtheoryofFDId)Bothb)andc)55Answer:b14.Coca-Colahasinvestedinb15.MNCsmayundertakeoverseasinvestmentprojectsinaforeigncountry,despitethefactthatlocalfirmsmayenjoyinherentadvantages.Thisimpliesthata)MNCsaremakingamistakeinthiscaseandwillhavetoeventuallywithdrawb)MNCsshouldhavesignificantadvantagesoverlocalfirmssuchascomparativeadvantagesduetointangibleassetsc)Thelocalfirmswillnothavetocompeteduetotheirinherentadvantagesovertheforeigners.d)noneoftheabove56Answer:b15.MNCsmayundertakeoverseas16.AccordingtotheinternalizationtheoryofFDIa)Firmsthathaveintangibleassetswithapublicgoodpropertytendtoinvestdirectlyinforeigncountries.b)Propertyrightsinintangibleassetsaredifficulttoestablishandprotect,especiallyinforeigncountrieswherelegalrecoursemaynotbereadilyavailable.c)b)anda)d)Noneoftheabove57Answer:a16.Accordingtotheinternaliz17.U.S.carmakerswereforcedtobuildtheirownnetworkofdealershipstoentertheJapanesemarket.a)Thisisanexampleofbackwardverticalintegrationb)Thisisanexampleofforwardverticalintegrationc)Thisisanexampleofsidewaysverticalintegrationd)Noneoftheabove58Answer:b17.U.S.carmakerswereforced18.Whichofthefollowingstatementsistrueaboutproductlifecycletheory?a)Intheearlystagesoftheproductlifecycle,thedemandforthenewproductisrelativelyinsensitivetothepriceandthusapioneeringfirmcanchargearelativelyhighpriceb)ItpredictsthatovertimetheU.S.switchesfromanexportingcountryofnewproductstoanimportingcountryc)Ithasan“S”shapedcurvewhenplotting“quantitysold”versus“time”d)Alloftheabove59Answer:d18.Whichofthefollowingstat19.Asamodeofentryintoaforeignmarket,cross-borderacquisition:a)Involvesbuildingnewproductionfacilitiesinaforeigncountryb)Offerfasterspeedovergreenfieldinvestmentc)Canofferaccesstoproprietaryassetsd)b)andc)60Answer:d19.Asamodeofentryintoaf20.Synergisticgainsrefersto:a)gainsfromhedgingb)gainsobtainedwhenthevalueoftheacquiringandtargetfirms,combinedtogether,isgreaterthanthestand-alonevaluationsoftheindividualfirmsc)gainsarisingifthecombinedcompaniescansaveonthecostsofproduction,marketing,distribution,andR&Dd)bandc61Answer:d20.Synergisticgainsrefersto21.Anincreaseinpoliticalriskcanbemanagedby:a)adjustingaforeigninvestmentproject’sNPVbyeitherreducingitsexpectedcashflows,orbyincreasingthecostofcapitalb)formingjointventurewithalocalcompanyc)purchaseinsuranceagainstthehazardofpoliticalriskd)alloftheabove62Answer:d21.Anincreaseinpoliticalri22.ThecommunistvictoryinChinain1949isanexampleofa)Microriskb)Macroriskc)Botha)andb)d)Noneoftheabove63Answer:b22.ThecommunistvictoryinCh64Part5FinancialmanagementofMNCSChapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapter17InternationalCapitalStructureandtheCostofCapitalChapter18InternationalCapitalBudgetingChapter19MultinationalCashManagementChapter21InternationalTaxEnvironment1Part5Financialmanagemento65Chapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapterObjective:

ThischapterdiscussesvariousissuesassociatedwithforeigndirectinvestmentsbyMNCs,whichplayakeyroleinshapingthenatureoftheemergingglobaleconomy.2Chapter16ForeignDirectInv66Chapter16ForeignDirectInvestmentandCross-borderAcquisitionsChapteroutlines:GlobalTrendsinFDIWhyDoFirmsInvestOverseas?Cross-BorderAcquisitionsPoliticalRiskandFDI3Chapter16ForeignDirectInv67KeywordsFDIflowsFDIstocksGreenfieldinvestmentCross-bordermergersandacquisitionsIntangibleassetsProductlife-cycletheory无形资产跨国并购绿地投资对外直接投资流量对外直接投资存量产品生命周期理论4KeywordsFDIflows无形资产跨国并681.GlobalTrendsinFDIFirmsbecomemultinationalwhentheyundertakeforeigndirectinvestments（FDI).FDIisinvestmentinaforeigncountrythatgivestheMNCameasureofcontrol.51.GlobalTrendsinFDIFirms691.1TwotypesofFDIGreenfieldInvestmentFDIofteninvolvestheestablishmentofnewproductionfacilitiesinforeigncountriessuchasHonda’sOhioplant.Cross-BorderAcquisitionFDImayalsoinvolvemergersandacquisitionsofexistingforeignbusinesses.AnexampleisprovidedbyFord,whichrecentlyacquiredeffectivecontrolofMazda,aJapanesecarmanufacturer,aswellasJaguar,aBritishautomobilecompany.61.1TwotypesofFDIGreenfie701.2FDIflowsandFDIstocksTheFDIoutflowin2006was$1215.8billion.TheFDIinflowin2006was$1305.9billion.FDIstocksaretheaccumulationofpreviousFDIflows,whichwas$12474.3billionin2006.71.2FDIflowsandFDIstocksTAverageAnnualFDI(inBillionsUSD)2002-200616-71AverageAnnualFDI(inBillion721.3China’sFDIflows91.3China’sFDIflows732.WhyDoFirmsInvestOverseas?Whydofirmslocateproductionoverseasratherthanexportingfromthehomecountryorlicensingproductiontoalocalfirminthehostcountry?TradeBarriersImperfectLaborMarketsIntangibleAssetsVerticalIntegrationProductLifeCycleShareholderDiversificationService102.WhyDoFirmsInvestOvers741.1TradeBarriersGovernmentsmayimposetariffs,quotas,andotherrestrictionsonthefreeflowofgoods,servicesandpeople.Sometimes,governmentsmayevenimposecompletebanstotheinternationaltradeofcertainproducts.111.1TradeBarriersGovernm752.1TradeBarriersFacingbarrierstoexportitsproductstoforeignmarkets,afirmmaydecidetomoveproductiontoforeigncountriesasameansofcircumventingthetradebarriers.AclassicalexampleisHonda.SincethecarsproducedinOhiowouldnotbesubjecttoU.S.tariffsandquotas,HondacouldcircumventthesebarriersbyestablishingproductionfacilitiesintheU.S..122.1TradeBarriersFacingba762.2LaborMarketImperfectionsAmongallfactormarkets,thelabormarketistheleastperfect.Ifthereexistrestrictionsontheflowofworkersacrossborders,thenlaborservicescanbeunderpricedrelativetoproductivity.TherecentsurgeinvestmentinChinacanbeattributable,inpart,tothehighlyproductive,low-costworkforcesinChina.刘植荣：世界工资研究报告132.2LaborMarketImperfectioLaborCostsaroundtheGlobe(2006)CountryAverageHourlyCost($)CountryAverageHourlyCost($)Germany$34.21Japan$20.2Belgium$31.85Spain$18.83Sweden$31.8Korea$14.72UK$27.1Israel$12.98Australia$26.14Taiwan$6.43Canada$25.74HongKong$5.78Italy$25.07Brazil$4.91France$24.9Mexico$2.75US$23.82Philippines$1.07China$0.6716-77LaborCostsaroundtheGlobe(782.3IntangibleAssetsMNCsoftenenjoycomparativeadvantagesduetospecialintangibleassetstheyposses.Examplesincludetechnological,managerial,andmarketingknow-how,superiorR&Dcapabilities,andbrandnames.Sincethepropertyrightsinintangibleassetsaredifficulttoestablishandprotect,especiallyinforeigncountrieswherelegalrecoursemaynotbereadilyavailable.Coca-Colahasaveryvaluableassetinitscloselyguarded“secretformula”.Toprotectthatsecretformula,Coca-ColahaschosenFDIoverlicensing.152.3IntangibleAssetsMNCsof792.4VerticalIntegrationMNCsmayundertakeFDIincountrieswhereinputsareavailableinordertosecurethesupplyofinputsatastableprice.Verticalintegrationmaybebackwardorforward:Backward:involveanindustryabroadthatproducesinputsforMNCs,e.g.afurnituremakerbuyingaloggingcompany.Forward:involveanindustryabroadthatsellaMNC’soutputs,e.g.aU.S.automakerbuyingaJapaneseautodealership.162.4VerticalIntegrationMNCs802.5ProductLifeCycleNewproduct:U.S.firmsdevelopnewproducts,suchascomputers,televisionsandmass-producedcars,andfirstmarketedinthedomesticmarket,andthenmarketsexpandoverseas.Maturingproduct:FDItakesplacewhenproductreachesmaturityandcostbecomesanimportantconsiderationfortheMNC.Standardizedproduct:importedfromoverseas.172.5ProductLifeCycleNewpr812.5ProductLifeCycleQuantityQuantityTheU.S.LessadvancedcountriesproductionNewproduct Maturingproduct StandardizedproductNewproduct Maturingproduct Standardizedproductexportsconsumptionconsumptionimportsproductionimportsexports182.5ProductLifeCycleQuanti822.5ProductLifeCycleItshouldbenotedthattheProductLifeCycletheorywasdevelopedinthe1960swhentheU.S.wastheunquestionedleaderinR&Dandproductinnovation.IncreasinglyproductinnovationsaretakingplaceoutsidetheUnitedStatesaswell,andnewproductsarebeingintroducedsimultaneouslyinmanyadvancedcountries.Productionfacilitiesmaybelocatedinmultiplecountriesfromproductinception.192.5ProductLifeCycleItsho832.6ShareholderDiversification

servicesFirmsmaybeabletoprovideindirectdiversificationtotheirshareholdersifthereexistssignificantbarrierstothecross-borderflowofcapital.CapitalMarketimperfectionsareofdecreasingimportance,however.Managerscanthereforeprobablynotaddvaluebydiversifyingfort