Zhi Inc., an Argentine paper company is looking to expand worldwide.

Zhi Inc., an Argentine paper company is looking to expand worldwide. The company exclusively makes office printer paper and sells its paper in Argentina for $5 per 1k pages. In 2014, South Africa joined the WTO and reduced its tariff rates on all paper products from 40% to 5%. That same year, Zhi began selling its products in South Africa. In order to facilitate the increase in paper sales, Zhi purchased land from the Argentine government (at a rate 5% below market value) and constructed a new manufacturing facility. The manufacturing facility was constructed in the Pampas region of Argentina so that the company could take advantage of a new tax incentive for companies that build there and use at least 95% of the factory’s production for exports. Zhi also announced that the new facility would only be used to make office paper for consumption abroad.Zhi Inc., an Argentine paper company is looking to expand worldwide. The company exclusively makes office printer paper and sells its paper in Argentina for $5 per 1k pages. In 2014, South Africa joined the WTO and reduced its tariff rates on all paper products from 40% to 5%. That same year, Zhi began selling its products in South Africa. In order to facilitate the increase in paper sales, Zhi purchased land from the Argentine government (at a rate 5% below market value) and constructed a new manufacturing facility. The manufacturing facility was constructed in the Pampas region of Argentina so that the company could take advantage of a new tax incentive for companies that build there and use at least 95% of the factory’s production for exports. Zhi also announced that the new facility would only be used to make office paper for consumption abroad.

In 2015, Zhi, along with its major competitors, was able to greatly increase its exports to South Africa. In order to stay competitive, Zhi sold its office paper in South Africa at $3 per 1k pages. South African paper manufacturer, Zhang, is complaining that consumers prefer the foreign paper and that its sales have decreased by 90%. In a study, researchers found that Zhang’s paper is of too low a quality, yet Zhang wants the government to act. The South African government would like to impose an anti-dumping measure, a countervailing duty, a safeguard measure, or take Argentina to the WTO. They have asked you to evaluate the above facts and determine which option would be best and why. They do not have the resources to do full evaluation of the economic harm caused by Zhi just yet and instead just want to know which remedy they should focus on. IRAC