会计代写|BSB50807 International Business

Foreign investment laws in China currently provide that applications to establish joint ventures with a capital investment of over $\$ 100$ million in certain industries must be submitted to the Ministry of Commerce (MOFCOM) in Beijing for approval. Joint ventures with investments below $\$ 100$ million can be approved at the local level. In the 1990s, some local approval authorities began the practice of allowing joint venture applicants to split a single application to establish a joint venture of over their approval limit into two or more applications on the theory that local approval is legal so long as each application is under the approval limit. The local authorities allowed the splitting of applications even though all of the applications really concerned a single joint venture and even though the total capital invested in the joint venture that was finally established was over their approval limit. Some lawyers viewed this tactic as an artifice to circumvent central-level requirements, but many parties favored this approach because it avoided an application to Beijing with all of the delays and more intense scrutiny that would follow.

A senior finance manager in Acme-China comes to you, Acme’s inhouse counsel, and says, “Can we just split our application to establish our new $\$ 100$ million joint venture into two $\$ 50$ million applications and submit them to the local authorities who have promised to approve the deal in 30 days so that we avoid the hassle and the two-year wait for approval in Beijing? You know that I need to get this done because I am going back to the United States next year when I’m up for Vice President. I’ll also put in a good word with your boss in the United States who says that he is looking for a new General Counsel, North America. Look, I know that you have some reservations but you admit that the law is unclear. Anyway, the local authorities have already told us that they will approve the application so we are covered. If MOFCOM raises any questions we can just say that the local authorities approved the application and told us that this procedure was lawful. So please draw up the two applications and get them to me by the end of the week. Let’s get a beer after work at the White Swan Hotel and talk about this further. My treat.” As you leave work that evening for the White Swan, you remember from your professional ethics class in law school that you are to represent your client zealously and within the boundaries of the law but then realize that this axiom isn’t very helpful in this situation. You also think about how nice it would be to move back to the United States and get a promotion. What do you tell the finance manager?

You are in-house counsel at Acme’s subsidiary in Russia and have a disagreement with a business manager over the legality of certain payments that are being made to the local government authorities in connection with some needed approvals. You are concerned that these payments might be considered to be illegal bribes under local law and may also raise problems under the U.S. Foreign Corrupt Practices Act (see Chapter Six at pp. 399-422), but your business manager argues that these are lawful administrative fees and that this is a “gray area” as all of Acme’s competitors are paying them. You have a meeting with the business manager and lay out the five reasons you think that the payments are illegal, but the manager says, “Okay, you’ve done your job by laying out the risks for me. I’m willing to take the risks so let’s make the payments.” As you are opposed to the payments, you then suggest that the company get an opinion letter from an outside local counsel. You can see that the business manager is irritated with you (and you worry momentarily about your annual review from the manager), but the manager finally agrees to abide by the opinion letter. You hire one of a number of newly established local Russian law firms specializing in foreign investment and you explain your position and the position of the business manager on the payments. One week later, you get an opinion letter signed by the local firm stating that, under local law, it is absolutely clear that the payments are illegal, and listing the five reasons that you stated. You also get a bill for $\$ 25,000$ and a letter with a long list of other areas in which the law firm is eager to help you. Do you give the opinion letter to the business manager? How would you suggest getting an opinion letter from outside counsel in this situation? What cautions about dealing with outside law firms does this episode suggest?

In light of the success of fast-food franchises such as McDonald’s and Pizza Hut in China, Joe’s Blue Collar Burgers, an Ohio company with locations around the Midwest, is considering expansion into China. Joe’s has been able to successfully compete against famous fast-food chains in the Midwest based on its no-frills, working-class image, offering burgers at half the price of more flashy fast-food chains. Joe’s decor also reflects its image and approach. Joe’s founders grew up during the Great Depression and have consistently stressed frugality in the company’s corporate philosophy. Food is served in clean but plain and somewhat austere surroundings. Joe’s has signs in various places in its restaurants stressing thrift in daily life, a return to the simple non-materialistic values of rural America, and the rejection of a wasteful, luxury lifestyle. Joe’s has developed a niche in the U.S. market and has been earning modest but steady profits for many years. Joe’s management sees no reason why using the same strategy to compete against fast-food competitors in China will not be just as successful as it was in the United States. Do you see any issues relating to culture with Joe’s approach to China?

Texas Barbecue Ribs, a successful Houston-based restaurant chain, is considering an expansion into Europe. Texas Ribs serves supersized portions of smoked ribs, southern-style coleslaw, and crunchy fries with its slogan “Everything Comes Bigger in Texas” in an interior setting with bold colors, a southwestern motif, and loud Texas country music. The restaurant has been quite successful in the Southwest and the South. What cultural issues might Texas Ribs face in European markets? How would Texas Ribs do in China?