Report Market Entry

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port market entryA.

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... various business experts.

Demand for energy has been rather weak in recent years and alternative energy providers in particular have been suffering because of very low GDP growth rates in most countries. In the People’s Republic of China, however, economic growth and energy consumption are unabated and the excessive use of fossil fuels has caused dangerously high pollution levels. As a result, Chinese authorities are now offering financial incentives to encourage the production of solar energy equipment. Accepting Sun Ho’s invitation would therefore allow SPT to produce its in a market where demand is high and to benefit from government support. Admittedly, foreign direct investment in China also has its drawbacks. Occasional cases of patent infringement and violations of intellectual property rights may still occur, and bureaucracy and interference by authorities can slow business operations. Nanjing’s local government, however, is known for its openness towards Western companies, which are able to operate far more independently in Nanjing than anywhere else in China. As concerns SPT’s financial situation, the company made losses in 2007 and 2008 as a result of the global economic slowdown. Yet it recorded a positive net income again this year which is expected to triple in 2010, to more than 28 million dollars. This figure will be pushed even higher if SPT takes up Sun Ho’s joint venture proposal. Even if this represents a considerable up-front investment, being three times the size of SPT’s joint venture in Spain, it can be confidently expected to generate a large and lasting earnings stream As SPT’s partner will be Sun Ho, the uncertainties that usually arise for foreign enterprises operating in China will be eliminated. As SPT’s long-standing distributor in China, Sun Ho has always promoted SPT’s products effectively and reported instantly on demand shifts in the market. The loss forecast for this...
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