In today's global economy, it is not uncommon for companies to manufacture goods in one country for sale in other countries. This research considers an auto parts manufacturer seeking to establish a new production facility. Malaysia and India are both under consideration, and three key factors will be taken into account: wage and price controls, property rights, and government regulations affecting business.
The Indian government participates in wage and price controls, and price subsidies are particularly common in the agricultural sector, but rare in other sectors. There is a minimum wage in India, which also has a highly skilled and educated workforce. Companies must obtain government permission when laying off more than 100 workers, but such permission is generally easily granted. There is legislation pending which would set the threshold for this permission at 1,000 workers ("India," 2002).
Malaysia also has a minimum wage for workers, and also requires contributions to a Social Security program. The Malaysian government also mandates benefits such as maternity leave. The Malaysian work force is considered well education and skilled ("Malaysia," 2002).
Until 2002, India provided patent protection for processes, but not products. Since 2002, most products--including auto parts--are covered by patent protection. Enforcement is generally considered inconsistent, and some of the patent regulations remain unclear. Copyright and trademark protection is generally accepted as weak. Land use is particularly problematic in India, where land transfers and titles can be convoluted. In addition, there is no system for recording secured interest in property, so using equipment as collateral for loans can be difficult ("India," 2002).
Malaysia's legal system and legislative environment is generally sufficient to protect property rights. Copyright protection is granted f
...