Executives at Smithson Soda, a U.S. firm, have decided to enter the Chinese market through a licensing agreement with a beverage manufacturer located in Shanghai. Which of the following statements, if true, most likely undermines this decision?
A) Smithson Soda is low on capital due to a recent expansion of its domestic production plant.
B) Smithson Soda successfully entered the European and Australian markets last year.
C) Smithson Soda typically relies on freight forwarders to handle global shipments.
D) Smithson Soda must protect its unique beverage formula to prevent duplication.

Question

Quizplus · Accepted Answer

The fact that Smithson Soda must protect its unique beverage formula to prevent duplication undermines the decision to enter the Chinese market through a licensing agreement, as it raises questions about the ability to protect intellectual property in China.