Please consider the following information for the next 4 questions. Drysdale Co. is a U.S. firm considers to establish a Chinese subsidiary that produces cell phones in China and sells them in Singapore. This subsidiary pays its wages and its rent in Chinese yuan. The cell phones sold to Singapore are denominated in Singapore dollar. Assume that Drysdale Co. expects that the Chinese yuan will continue to stay stable against the dollar. The subsidiary's main goal is to generate profits for itself and it reinvests the profits. It does not plan to remit any funds to the U.S. parent. Drysdale Co. also conducts the assessment of the country risk of China. Drysdale has identified various political and financial risk factors, as shown below where 5(1) is the best(worst)value/lowest(highest) risk. Political Risk Factor Assigned Rating Assigned Weight Blockage of fund transfers 2 40% Bureaucracy 2 6096 Assigned Rating Financial Risk Factor Interest rate Inflation Exchange rate Competition Growth 4 3 Assigned Weight 1596 25% 20% 2096 20 4 5 Drysdale Co. has assigned an overall rating of 53 percent to political risk factors and of 47 percent to financial risk factors. Drysdale Co. will not establish the subsidiary in China if the country risk rating is below 3.0. Question 2 (3.33 points) What is the country risk rating of China and should Drysdale Co. establish the subsidiary in China? 3.01: yes 2.83; no 6.15: yes 1.98: no Question 3 (3.33 points) If Drysdale Co. establishes the subsidiary in China and later finds out that the Chinese subsidiary needs to borrow money to finance its expansion, which currency should the Chinese subsidiary borrow in order to reduce its exchange rate risk? OU.S. dollar Chinese yuan Singapore dollar Question 4 (3.33 points) What should you do if you were the representative of the Drysdale's Chinese subsidiary when, during negotiations, the representatives of the other Chinese business keep mentioning that the proposal is unworkable and that they fear agreement will not be met? Display some anger to demonstrate your commitment to the partnership. Suggest an end to the negotiations and gage their reaction: Offer concessions to save the deal. Question 5 (3.33 points) You, the manager of the Drysdale's Chinese subsidiary, are holding a meeting with Chinese colleagues. 21 Reprimand the colleague. In China it is rude to make suggestions to the boss. Speak bluntly and expose why the idea is not workable. The Chinese respect plain speaking Acknowledge the suggestion and state that you will think about it. This saves anyone from losing face