We are giving advice to a small company that wants to help the Chinese government to find and reduce air pollution. We are giving advice about Chongqing, but it can apply to just about any province in China. For example, the level of air pollution is very high in many areas of China. However, this pollution is more than a local, Chinese issue. China’s pollution even spreads beyond Asia. Some of it affects even the USA. Certain factories, however, are significant “emitters” of various forms of pollution containing metals and toxic gases. Our client wishes to be the premier go-to company for China. With permission and close ties (within legal bounds) with the local officials, we can help our client establish a presence and then maintain a strong foothold. By selecting Chongqing, we can target various factories, monitor their pollution effects, track the air patterns, and enable the government to identify cheaters who misrepresent their pollution output. Once our client deploys a sufficient number of detectors, the government can then fine these emitters. They can be fined to an amount that offsets costs the government was spending. In the long run, our client has to expect that inside information trading may cause them to have new competition. But, as long as the proper intellectual property rights, copyrights, and other matters are filed and safeguarded, our client can expect to maintain a five to 8 year lead ahead of domestic competitors. Therefore, our strategy of implanting our client into the minds of the local officials, having a strong IP rights position, assisting the government reduce pollution, and helping the government sell or trade pollution credits, China can be a significant source of income for our client for a lower cost than China would have to pay without our client’s technology. Just the medical and health costs savings alone will be of significant benefit to China. Furthermore, this will significantly boost China’s image in the eyes of the Koreans and Japanese who are daily affect by pollution emitted from China’s factories, roads construction, and coal-fired plants. Politically, our client’s product will dramatically improve relations between China and her neighbors.
(A) In the process of expanding in the region, how might governmental policies or other institutional factors help or slow down your strategies for growth?
Recently, China has worked with the USA in an operation called “Operation Fox Hunt”, which is intended to catch financial lawbreakers who stole from the public or otherwise didn’t pay taxes. Some of these people worked for state-owned enterprises (companies set up by and owned by the government) and some were private business people who took money out of China and put it into overseas banks. Many of the criminals (suspects) chose the USA as their destination. The magnitude of the problem is huge. Almost 900 billion dollars vanished from China in less than a few decades, and much of the money stolen was stolen by government officials or by those who had ceremonial titles or positions. Also, middle and low level officials who ventured into corruption (bribery, graft, extortion, embezzlement, and so on) had deep ties to criminal organizations as well as officials in other provinces. The level of corruption might be seen as “staggering” since in some cases, China has summarily executed some offenders.
The problem our client may face, however, may be that it will have to pay special “access” or “expedite” fees just to be fast-tracked into a viable, competitive position. Some officials, the honest ones, will strictly adhere to regulations and can possibly require extensive amounts of certifications and other documents and…