Wonder Cat Licensing (Scenario)
Wonder Cat is a popular, new cartoon series created by the U.S-based All Cartoon Channel (ACC). Currently, the only Wonder Cat item available for sale are shirts that are sold exclusively through the ACC Web site. The cartoon series is a big hit in China, and as a result ACC has been approached by a Chinese firm about a licensing agreement. ACC executives are considering the pros and cons of such an agreement before making any final decisions.
-Which of the following statements most likely supports an ACC decision to enter into a licensing agreement with the Chinese firm?
A) Royalties from toys and apparel would be initially minimal.
B) The Wonder Cat brand's products could be easily counterfeited in other markets except in the Chinese markets.
C) The Chinese government restricts complete ownership of local operations by foreign firms.
D) China exclusively opts for high-control strategies such as FDI.

Question

Quizplus · Accepted Answer

The restriction by the Chinese government on complete ownership of local operations by foreign firms makes licensing a viable option for ACC to enter the Chinese market, as it allows them to operate within these restrictions.