Choosing Between Japan and Malaysia for International Investment

General Requirements:

Consider yourselves top managers of an imaginary company that you have been operating in Canada for some time. You have decided that it is time to internationalize your business.  Your company has to choose between two selected countries (Japan and Malaysia) in which to make a significant investment.

Both investments promise a similar long-term return, so your choice will be based solely on a foreign market (country) screening.  By the end of this assignment, you should be able to determine which country you would select for your investment and why.  Your findings and recommendations will form your Paper.

This assignment will require you to undertake significant research. All information in your project must be supported with reference to specific resources. Some resources will be suggested, but part of the project will require you to be creative with library resources and the Internet.

Here are some information sources that will help you get started:

• Course Textbook package
• The CIA World Factbook https://www.cia.gov/library/publications/the-world-factbook/
• World Trade Organization at https://www.wto.org/english/tratop_e/tratop_e.htm
• International Monetary Fund at https://www.imf.org/en/countries
• Global Insights https://globaledge.msu.edu/global-insights/by/country
• Organization for Economic Co-operation and Development https://www.oecd.org/
• Export Development Canada (EDC) at https://www.edc.ca/en/country-info.html
• Global Affairs Canada at https://www.canada.ca/en/services/business/research/internationaltradedatamarketintelligence.html
• The Canadian Trade Commissioner Services at https://www.tradecommissioner.gc.ca/index.aspx?lang=eng#markets
• McKinsey Global Institute. Globalization in transition: The future of trade and value chains at https://www.mckinsey.com/featured-insights/innovation-and-growth/globalization-in-transition-the-future-of-trade-and-value-chains

Important note: You should use primary sources of information, such as the World Trade Organization, International Monetary Fund, etc. instead sources of secondary data, for example, Trading Economics website.

Develop answers to each of the following questions about your assigned countries and integrate them into your Paper

1. What type of legal system does the country have?  Has the government erected any trade barriers in this market?  If so, how high are they?  Does the government welcome or discourage foreign investment? Will the nation’s laws permit 100% foreign ownership?  Will the government accept minority local ownership? How strong is intellectual property protection? Is the legal system generally viewed as transparent and fair by the local citizens? Apply the Corruption Perception Index.

2. Is the government stable, or is there infighting among major political fractions?  How vulnerable to political risk are foreign firms operating in the country? What kind of political risk do they face? Apply the Coface Political Risk Assessment tools.

3. What is the country’s currency called? What is its current value relative to the Canadian dollar? By how much has the currency’s value changed in the past five years relative to the Canadian dollar? Does the country use a fixed or flexible exchange rate policy? 

4. How high is inflation, the unemployment rate and public debt?How high are corporate taxes and personal income taxes?

5. Compare the Logistics Performance Index (LPI) measured by the World Bank in Canada to that of the country in question.

6. What is the level of foreign direct investment (FDI) in the economy? Which countries are the primary suppliers of FDI to the country?

7. Has the country experienced a balance of payments trade deficit or surplus in the past year? How large is this deficit or surplus? Has its official reserves account changed in the past year? By how much?  How large is its external debt?

8. Does the country belong to any regional trade blocs? If so, which ones?

9. Evaluate the country’s participation in global value chains measured by the McKinsey Global Institute including the Country Classification, MGI Connectedness Index, Global value chain archetype, Trade Intensity, and Diversification of Exports metrics.

10. Compare the Index of Economic Freedom measured by the Heritage Foundation in Canada to that of the country in question.

11. Based on the answers to the questions listed above, summarize the major challenges, benefits and costs to your imaginary Canadian company considering entering each country’s market. Which market poses the biggest challengeto you from the standpoint of strategic management?  In what ways are the challenges similar and in what ways are they different? Finally, which country would you select and why?