BUSN 427 Final Exam (Devry)

Square to a Hong Kong developer who, thanks to relationships andconnections developed over the years, was able to persuade cityofficials to overlook the lease McDonald’s held for the property.Explain the concept of guanxi. Why is it so important to businessesoperating in China? How did McDonald’s lack of guanxi raise itscosts of doing business in China?(TCO 3) In 2006, two Chinese journalists reported that the workingconditions at Hongfujin Precision Industries where Apple’s iPods areproduced were substandard. According to the report, not only wereworkers at the plant poorly paid, but they were also forced to workovertime. Apple immediately responded to the allegations and auditedthe factory in question. However, managers at the factory filed adefamation lawsuit against the two journalists. Despite the fact thatApple’s audit did indeed show substandard working conditions at thefactory, Hongfujin did not withdraw the lawsuit. Eventually theReporters Without Borders group took up the case for the tworeporters and the lawsuit was dropped.Should Apple be responsible for ensuring that its suppliers aresafeguarding the basic rights and dignity of its employees? How canApple be sure that its suppliers do not employ sweatshop labor?(TCO 3) Exports are largely responsible for China’s recent rapideconomic growth. The country, capitalizing on its cheap labor force,has focused on converting raw materials into products that areexported to developed countries such as the United States. In 2008,China’s trade surplus was a record $280 billion, and its holdings offoreign exchange reserves were over $1.95 trillion. Some critics havesuggested that China is following a neomercantilist policy.Are the claims that China is following a neomercantilist policy valid?Why or why not?