China Project Final

8/3/2019 China Project Final

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China: Country Risk Project

Team Members:

Nancy Flowers

Heather Le

Lita Lum

Tammy Ramirez

Farrah Thompson

Bus5840: Financial Management Policy

Professor: Kimberly Gleason

June 19, 2011



China: Country Risk Project

I. Introduction

China’s form of government is a communist state known as a People’s

Republic. The Chinese Communist Party (CCP) is the leading political party in China

(China). China’s population is estimated to be 1.34 billion people as of 2011 and

the per capita income is $865.03 per person. Some of the key economic

characteristics of China are that the inflation has gone down, but it is still at a high

amount. Inflation has been driven by higher food prices caused by problematic

weather last year and hikes in international food prices. The government says it will

allow a faster rise in China’s tightly controlled currency to cool prices by making oil

and other imports cheaper (McDonald, Joe 2011).

China’s GDP growth rate expanded 9.70% in the first quarter of 2011 over

last year’s amount. The major component allowing China’s rapid growth has been

exports. There are numerous Chinese dialects and many subdialects. The main

dialect spoken by 70% of the population is Mandarin. This dialect is taught in all the

schools and is the standard of government. Religion has its own significant value in

the life of Chinese culture. The five-sanctioned “patriotic religious associations” are

Buddhism, Taoism, Islam, Catholicism, and Protestantism. Buddhism is the most

widely practiced. Only two Christian organizations- - a Catholic church without

official ties to Rome and the “Three-Self-Patriotic Protestant Churches -- are

sanctioned by the Church Government (State). The major cities in China are: The

capital – Beijing, and the other major cities are Shanghai, Tianjin, Shenyang, Wuhan,



Guangzhou, Chongqing, Harbin, and Chengdu. China’s climate is tropical in the

south to subarctic in the north.

Recent news about China is that they recently rejected U.S. criticism over

deteriorating human rights saying that China’s progress in human rights “is an

objective fact” (BBC, 2011). China‘s growth economic outlooks look broadly

favorable despite the effect of higher raw commodity prices and the earthquake

that occurred in Japan recently. Unlike U.S. labor laws, employment laws in China

are in some ways more protective of the employees. Employment contracts are

generally required and normally stipulate probation periods of no more than six

months. A thirty-day advance notice and good cause are normally required in order

to fire an employee after the expiration of the probation period (although employee

incompetence and currency business reverse are considered good cause subject to

certain restrictions). An employee can be immediately fired for serious conduct

(Carnes). China does have a black market value of $168 billion and this market

consists of several things from book piracy to cigarette smuggling to wildlife

smuggling.

China’s physical infrastructure clearly has superior roads, airports, power,

and manufacturing facilities. China has a high level of political corruption. The

Chinese government is aware that corruption is endangering political stability and

economic growth, and they have been pursuing an anti-corruption campaign

targeted at both the public and private sector to try to curtail the persistent

problem. Corruption is perceived to be a considerable problem in China and this is

substantiated by The World Economic Forum Global Competitiveness Report 2010

-2011 in which corruption is ranked as the third largest constraint for doing business



in the country. Despite the obstacle posed by corruption, foreign investors are not

being scared off (Business, 2010).

China’s market remains attractive for the U.S. because they are committed to

their reform and opening-up policy as they will continue to build an open and

transparent legal environment based on relevant laws and regulations, in addition

to the rules set forth by the World Trade Organization (WTO) to embrace foreign

direct investment. What makes China’s market unattractive is the corruption of

counterfeit parts and the U.S. is convinced that China is not worth the risk solely for

cheap labor. In addition, China has done all types of industrial espionage episodes,

knockoffs from production overruns, the demand for investments in China, and the

poor quality of different products.

China is liberalizing its rule on religion. They are now having open churches

with was not available many years ago. There are many U.S. multinationals

companies operating in China such as, Capital One, Nestle, and McDonald’s. Due

to the fact that China is sending many of their students overseas for education, it is

becoming one of the most lucrative industries for several countries that trade with

them (China, 2009). The type of company I would recommend for this market

would be in luxury goods.

II. Financial Factors Affecting Expansion Decision The U.S. and Chinese positions on China's exchange rate policy have not

changed substantially over the previous year. Washington argues that by

maintaining a substantially undervalued exchange rate, China is gaining an unfair

competitive advantage that sustains a large trade surplus to the detriment of the



United States and many other countries. China's exchange-rate policy is seen by

U.S. officials as playing an important part in holding back adjustment of global

imbalances and delaying a more balanced and sustainable recovery in the world

economy.

While acknowledging that China has allowed greater exchange rate

appreciation, the United States argues that much more needs to be done on a more

regular basis. Furthermore, the U.S. stresses that faster appreciation in the

currency is, in fact, in China's best interest. It will help deal with China's growing

inflation problem and will also facilitate other needed policy changes and economic

reforms, facilitate a speedier rebalancing of China's economy away from heavy

dependence on investment and exports toward greater reliance on consumption to

drive economic growth. Rebalancing its economy has been a policy objective of

China, and it stresses the need for a gradual transition to avoid disruptions in

continued rapid economic growth and employment. A more rapid-paced

rebalancing of China's economy over the next few years with a substantially faster

rate of Yuan appreciation is also not seen by the Chinese as necessary. In their

view, China did not create the problems that led to the economic and financial crisis

and faster appreciation of the Yuan will not solve the woes of the advanced

economies. This view holds that the advanced economies need to correct their own

policy imbalances, particularly sizable fiscal deficits. In addition, Beijing points to

problems created by the role of the U.S. dollar as the world's primary reserve

currency and the recent renewed quantitative easing of U.S. monetary policy. It

calls for a diminished reserve-currency role for the dollar as part of a more equitable

and resilient international financial system. While China is right that the reserve-

currency role of the dollar allowed the United States to run a persistent fiscal deficit,



The history of China's Stock Market is quite elaborate and complex. It dates

back to the 19th century. The entire market is based around the Shanghai Stock

Exchange, but tied directly to two other exchanges in Hong Kong and Shenzhen.

The establishment of the stock exchange took a long time, as did the growth in the

business trading with foreign markets.

Establishment

1. Following the First Opium War, the Treaty of Nanking in 1842 established an

area in Shanghai known as the International Settlement. This development

prompted the emergence of foreign markets in the area. This culminated in the

introduction of securities trading in the late 1860s. In June 1866, the first share

list began to appear prompting a number of banks and joint-stock companies to

be formed. This was coupled by an interest in diversification for investors and

trading houses.

Boom

• During the late 1880s, the Chinese mining industry boomed. In 1891, the

Shanghai Sharebrokers' Association was established, creating China's first

stock exchange. Most of the shares were supplied by local companies and

banks took the opportunity to dominate the majority of the private shares.

By the turn of the century, Hong Kong and Shanghai banks had

consolidated the majority of the trading shares from foreign bases. In

1904, the Association moved to establish another exchange in Hong Kong,

expanding the grip of the Chinese market in the world economy.

http://www.ehow.com/business/

http://www.ehow.com/business/



Closing

• In 1920, the Shanghai Securities and Commodities Exchange were

established. This was followed the next year by the Shanghai Chinese

Merchant Exchange. In 1929, the markets combined and officially formed

the Shanghai Stock Market. Rubber became one of the prime stocks at the

same time as a number of foreign companies, such as those from Japan,

began to consolidate its economic control of the Chinese Stock Market. In

1941, the Japanese military took control of Shanghai and the stock market

ceased operation. It reestablished itself shortly after the war, but was

closed in 1949 during the Communist Revolution.

Opening Again

• The Cultural Revolution ended in the early 1970s and Deng Xiaoping took

power over the nation. China reopened itself to foreigners in 1978. This

caused a number of companies to begin trading securities with foreign

firms again prompting a surge in economic reform and continued

development of businesses. A socialist market economy was established

during the 1980s. This ultimately led to the Shanghai Stock Exchange to

be reopened in 1990. At the same time, China opened a secondary

exchange in Shenzhen aimed more at technology and government

securities.

Hong Kong

• In 1997, the Hong Kong Stock Exchange was implemented into the

Chinese system. Due to the fact that Hong Kong had long been a British

protectorate, special laws were established for the area that made the

http://www.ehow.com/legal/

http://www.ehow.com/legal/



Hong Kong Stock Exchange more privatized than either Shanghai or

Shenzhen. Both the Shanghai and Hong Kong Stock Exchanges are

located very close to each other and aid each other by trading divergent

securities. The most notable concept of the Hong Kong location is that,

unlike the other two exchanges, Hong Kong is a for-profit enterprise.

*See Chart B in the appendix for the stock market data for China.

China’s credit rating was raised by Standard & Poor’s to the fourth-

highest level as world-record foreign-currency holdings add to the nation’s

financial strength. The long-term rating increased to AA- from A+, according

to a statement made by S&P. The company also upgraded Hong Kong to

AAA from AA+. The outlook was stable in both cases according to another

S&P statement. Higher ratings may encourage investors to pump more

money into the fastest-growing major economy, complicating government

efforts to cool inflation and prevent asset bubbles. This decision echoed a

move by Moody’s Investors Service last month and a trend across emerging

markets, with nations from Indonesia to Brazil to Turkey winning upgrades or

positive outlooks. “The rating hike will increase the attractiveness of China

as an investment destination,” said Ken Peng, a Beijing-based economist at

Citigroup Inc. “The rating may be raised further, but it will take a while,”

Peng said, citing concerns over stimulus-linked lending that could swell

banks’ bad loans. In November, China’s exports and imports rose to records

and industrial production grew at a faster pace, highlighting the economic



strength that may allow the government to accelerate the withdrawal of

economic stimulus.

Over the last five years, China’s development has increased and its foreign

debt stood at $323 billion at the end of 2006. China Development Bank, a so-called

policy bank that lends mainly to infrastructure projects, invested in Barclays PlC, the

U.K. bank competing to buy ABN Amro Holding NV in the largest financial-services

takeover. China Development has borrowed overseas in the past, and continues to

borrow to build and increase development. Over the last five years, Moody’s has

continued to highlight the improved strength and supervision of the large state-

owned commercial banks and upgraded the long- term deposit and debt ratings for

seven lenders to A1 from A2.

The yield on Critic Resources Holdings Ltd.'s $1 billion of U.S. dollar bonds

due in 2014 narrowed to 260 basis points, more than similar-maturity U.S.

Treasuries at 11:32 a.m. in Hong Kong, down from 285 basis points yesterday, the

lowest since July 23, according to Merrill Lynch & Co. The average yield since the

bonds were sold in May has been 214 basis points over U.S. Treasuries.

Although China’s Treasury bill rate is not available or published on the

internet for ordinary investors to evaluate, we expect the default risk spread or

solvent risk premium in China to decline in the next five years. This is mainly due to

trade surplus in China. Trade surplus lead to currency and capital surplus, as a

result, China would be less likely to default.

The political risk is high in China. Food and energy costs have continued to

rise in recent years. The Chinese government is very conscientious about the



country’s inflation rate. High inflation would likely turn into riots as majority of the

China’s population is poor and more likely to revolt against the Chinese

government. Doing business in a developing country and in an emerging economy

can bring added risks of an undesirable political event that many investors are

simply not prepared to deal with on their own. Therefore, we recommend

purchasing the political risk insurance to mitigate the noncommercial risks. Such

insurance is offer by the Multilateral Investment Guarantee Agency (MIGA), a

member of the World Bank Group.

The financial risk in China is also high. China’s financial reporting is not as

transparent as the U.S. and other the developed countries. For instance, China

does not have a financial regulatory body to provide oversight on the financial

reporting like the SEC in the U.S. The accountancy evaluation and monitoring of

Chinese companies are done in a manner that is not exactly transparent. As a

result, foreign investors cannot rely on the financials prepare by Chinese companies

with respect to the completeness or accuracy of the information represented.

In the last five years, there weren’t any expropriation of foreign assets in

China. This is mainly due to the reason that China is trying to become a member of

the World Trade Organization (WTO) and want to have a good standing with foreign

investors. Entrance into the WTO will force China to take measures to change

customs, financial and legal procedures.

China has many restrictions on repatriation of profits. Today investors can

legally repatriate up to 90% of their annual profits from China, provided that they

fulfill certain norms made by the Chinese Government. For the profit repatriation

permission, companies need to set up local offices in China, file for the fourth

quarter tax returns (to finalize the net profit) and create a reserve account of at



least 10% of the total net profit. The profit repatriation rules change according to

certain things, like if the business is a joint venture or if it is enlisted as a

consultant, etc.

The local banking system in China is unsophisticated. China’s banking sector

remains at its early stage of development, mainly working with loans and deposits.

Interest income is the main source of income, though fee-based business has been

growing fast. Fee and commission income include income from agency services

(such as payment disbursement, collection, settlement, clearings), cash

management, remittance and settlement, custody services, consulting and advisory

services, bank cards, and other services. Sixty-eighty percent of all loans granted

by the local banking system are currently granted in accordance to the systems laid

out in the five-year plans. The majority of these are to the benefit of state owned

enterprises (SOEs). The four major Chinese banks (Bank of China, Agricultural Bank

of China, Industrial and Commercial Bank of China, China Construction Bank) handle

82% of all financial business. Although the banking industry is still highly regulated,

China’s accession to the WTO has led to a lesser control by the government. China

is in the process of passing new laws aimed at bringing the country’s banking

system up to international standards.

To invest in China, we would have to raise capital outside of China, as China’s

RMB is not an international reserve currency. A reserve currency is currency use to

price goods and services between the two countries. The RMB currency is not

tradable and therefore the market is very limited for RMB.

There are many factors to consider before making the investment in China.

We have to beware of the political red tape as many businesses are still control by

the government. We would hire experienced local partners to help us establish our



presence in China and work with the local government on foreign direct investment

limitations. We would hire local employees and provide them with lucrative

incentives to make the venture a successful one. We would train unskilled workers

in China to get up to par and also pay attention to the quality control to avoid

potential negative press. We would be required to raise substantial capital to enter

the new market. Such a huge investment in a foreign economy provides an added

risk that cannot be undertaken if the profits repatriation is limited by certain local

laws. One of the ways for the legal profit repatriation is to set up a financing

structure between the parent company in the U.S. and the subsidiary venture in

China. This would require the parent company to fund the subsidiary with a loan.

The subsidiary can repatriate its profit to the parent by making loan and interest

payments. The interest payments on the subsidiary are tax deductible and the loan

repayments are not taxable to the parent.

III. Management Factors to Consider

When investing abroad, one must consider the modes of foreign involvement

in terms of a sequence of decisions regarding where production is to occur, who is

to own or control intellectual property, and who is to own the actual production

facilities. When a firm decides to enter a certain foreign country, it has to choose a

mode of entry, which mainly includes the choice of a foreign target market, and the

objective and future goals of penetrating into the market. Management factors to

consider when doing business in China include deciding whether to export the

goods or produce them abroad. In addition, we would need to decide if licensing the

product or controlling the assets abroad would be more appropriate. Last, but not

least, managers must also consider whether they want their business to be a joint



venture or a wholly owned subsidiary. Each mode of entry will be examined using

pros and cons to evaluate which approach may best be suited for the foreign

venture.

The advantage of exporting versus production abroad is that it does not face

the same unique risks as FDI, joint ventures, strategic alliances, and licensing. In

addition, agency costs and political risks are avoided as the amount of front-end

investment is typically lower than in other modes of foreign involvement. However,

some of the disadvantages include, not being able to internalize and exploit the

results of its research and development as effectively as if it invested directly. In

addition, foreign markets may imitate the product and penetrate back into the

exporter’s own market for much cheaper. The cost of exporting may be more

expensive as production costs and labor in foreign countries are cost efficient.

Global competitors and imitators may make this option less profitable as more

businesses penetrate the market.

Licensing is a popular method for domestic firms to profit from foreign

markets without the need to commit sizable funds. Since the foreign producer is

typically wholly owned locally, political risk is minimized. Typically MNEs sell their

services in “unbundled form” rather than only through FDI. Local firms can purchase

managerial expertise and knowledge of product and factor markets through

management contracts, and purchase technology through licensing agreements.

However, license fees that are lower than FDI profits, high agency costs, possible

loss of quality control, and the risk that the technology will get stolen are just some

of the disadvantages of licensing.

In deciding whether to be part of a joint venture in a foreign market or

become a wholly owned subsidiary entirely depends on the confidence of the



business to remain competitive and culturally aware of local operations and policies

that take place abroad. A joint venture between a MNE and a host country partner is

a viable strategy if, and only if, the MNE finds the right local partner. Culturally,

having a local partner who understands the customs and local environment may

make the business transaction smoother when trying to penetrate into the foreign

market. The local partner can provide competent management and help to oversee

the entire firm. In addition, the local partner may have more access to contacts

which will help in getting the business started.

Depending on the size of the firm, it may be more profitable to go as a wholly

owned foreign subsidiary. This allows the company to make more independent

decisions without the interference of a foreign partner. Local and foreign partners

may have divergent views on how the business is run. In addition, political risk is

increased if the wrong partner is chosen. The success of a joint venture depends

primarily on the right choice of a partner. For this reason and a number of other

issues related to possible conflicts in decision making between a joint venture and a

multinational parent, the 100%-owned foreign subsidiary approach is more

common.

In order to bring the best leaders to manage a foreign workforce, a U.S.

manager should be compensated an equivalent amount abroad, if not more to “sell

the job” and motivate the manager to perform at their maximum level. With a lot at

stake doing business abroad, the compensation package should reflect the

manager’s skills and training in managing in a foreign environment. An

understanding of foreign policies and business cultures in doing business abroad are

some of the skills that are necessary for leading a successful venture overseas.



IV. Summary and Decision

There are many benefits of expanding into the China market. China

has very good infrastructure. This means that they have good roads, power

supply, airports, etc. They are committed to reforming their policies so that

there can be a transparent legal system in place. China has cheaper labor

than most other countries. They have become an important factor in the

growth of the global economy. They have a major trade surplus. There are

more exports being shipped out than imports being shipped in. There has

been no expropriation of foreign assets in the last five years. A company can

repatriate up to 90% of their profit from China, provided they fulfill certain

norms made by the Chinese government. A company could purchase

insurance from the Multilateral Investment Guarantee Agency (MIGA) to help

mitigate political and noncommercial risks.

There are also many risks and costs involved. China’s per capita

income is very low. It is growing a little, but it is still very low. This could

mean that Chinese customers would not be able to afford many items. China

has a very high inflation rate. They have a high number of black market

goods. They also have high political and financial risks. The political

corruption is very high. There is a lot of political “red tape.” This endangers

political stability and economic growth. There is no financial regulatory body.

China has very strict employment laws and rules. They have an undervalued

exchange rate. The banking system is still in its very early stage. In order to

raise capital, the company would have to go outside of China. The food and

energy costs are high and continue to climb even higher. Many businesses

are still controlled by the government.



If the decision was made to expand into the market, there are certain

things that would need to be done. The company should hire local

employees because of the cheap labor and provide them with lucrative

incentives to ensure they do a good job. These unskilled workers would need

to be sufficiently trained. A substantial amount of capital would have to be

raised outside of China. The financing should be set-up where the structure

between the parent company in the U. S. and the subsidiary company in

China can repatriate its profits to the parent company. The loan payments

made are non-taxable to the parent company. The interest payments made

to the parent company are tax deductible. A thorough understanding of

foreign policies and business cultures are a must. The company may have to

rely on exporting many of their products.

After examining all of the benefits, risks, and cost; the risks and costs

far outweigh the benefits. There is too much unrest and unease in China at

the present time. The political risks, corruption, and problems are very

troublesome. The high inflation, low per capita income, unregulated financial

system, young banking system, and the fact that too many things are

government controlled and government run would make a decision about

expanding into the market in China a very hard decision and one that would

probably best be declined at the present time.



V. Sources Cited

Anstey, Chris. “China’s Debt Rating Raised by Standard & Poor’s”

December 16, 2010, 4:51 AM EST

BBC New – China rejects US criticism of human rights record, Retrieved on May 11,

2011

http://www.bbc/co.uk/news/world-asia-pacific-13358081?print=true

Business Anti-Corruption Portal, Retrieved on May 12, 2011 from

http://www.busienss-anti-corruption.com/country-profiles/east-asia-the-

pacfic/china/snaps

Carnes, David, Investing in China: Hiring, Firing and Labor Law, Retrieved on May

11, 2011


http://www.busienss-anti-corruption.com/country-profiles/east-asia-the-pacfic/china/snaps







http://www.streetdirectory.com/travel_guide/print_article.php?

articleID=13938

China GDP Growth Rate, Retrieved on May 11, 2011 from

http://www.tradingeconomics.com/china/gdp-growth

China: Havocscope Black Markets, Retrieved on May 11, 2011 from

http://www.havocscope.com/regions-main/asia/china

China Overview: China's Economy at Glance, retrieved on June 12, 2011

http://www.chinaknowledge.com/Business/CBGdetails.aspx?

subchap=1&content=1

China – Politics, government, and taxation, Retrieved on May 11, 2011 from

http://www.nationsencyclopedia.com/economies/Asia-and-the-

Pacific/China_POLITICS_G...

China – U.S. Department of State, Retrieved on May 11, 2011 from

http://www.state.gov/r/pa/ei/bgn/18902.htm#political

Gentile, Angela and Valahu, Philippe, MIGA in China: Political Risk Insurance Helps

Investors Push Projects Ahead, retrieved on June 14, 2011

http://www.chinabusinessreview.com/public/0403/miga.html

McDonald, Joe, China’s April inflation eases but still high, Retrieved on May 11, 2011

from

http://www.streetdirectory.com/travel_guide/print_article.php?articleID=13938




http://www.chinaknowledge.com/Business/CBGdetails.aspx?subchap=1&content=1


http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/China_POLITICS_G
















http://news.yahoo.com/s/ap/20110511/ap_on_bi_ge/as_china_inflation/print

Profit Repatriation: The Foreign Direct Investment Incentive, Retrieved on June 14,

2011 from

http://www.buzzle.com/articles/profit-repatriation-the-foreign-direct-

investment-incentive.html

The Chinese Banking System and the prospects of foreign banks and operators,

retrieved on June 14, 2011

http://jpkc.szpt.edu.cn/english/supplement/banking%20system6.htm

WantChinaTimes.com, Retrieved on May 12, 2011 from

http://www.wantchinatimes.com/news-print-cnt.aspx?cid=1101&MainCatID=11&id=2011...

Zhang, Dingmin. “China's Debt Rating Upgraded by Moody's to A1 (Update6) “

Bloomberg July 26, 2007 06:12 EDT

VI. Appendix

Chart A

Below is the Chinese Yuan to U.S. Dollar Currency Exchange

Forecast.

Chinese Yuan to One U.S. Dollar. Average of Month.


http://www.buzzle.com/articles/profit-repatriation-the-foreign-direct-investment-incentive.html





http://www.wantchinatimes.com/news-print-cnt.aspx?cid=1101&MainCatID=11&id=2011










Month DateForecast

Value

50%

Correct +/-

80%

Correct +/-

0 Apr 2011 6.5267 0.000 0.000

1 May 2011 6.490 0.008 0.018

2 Jun 2011 6.447 0.010 0.023

3 Jul 2011 6.407 0.011 0.026

4 Aug 2011 6.380 0.013 0.028

5 Sep 2011 6.350 0.014 0.030

6 Oct 2011 6.320 0.014 0.032

7 Nov 2011 6.305 0.015 0.034

8 Dec 2011 6.300 0.016 0.036

Updated Tuesday, May 10, 2011

Chart B

http://www.forecasts.org/info/error.htm










S & P 500

MSCI

China

Date Adj Close Date

Adj

Close

1/3/2011 1271.87 1/3/2011 22.250.733

2=Correl

12/1/201

0 1257.64 12/1/2010 21.85

11/1/201

0 1180.55 11/1/2010 22.45

10/1/201

0 1183.26 10/4/2010 22.8

9/1/2010 1141.2 9/1/2010 22.05

8/2/2010 1049.33 8/2/2010 20.45

7/1/2010 1101.6 7/2/2010 20.85

6/1/2010 1030.71 6/1/2010 20.4

5/3/2010 1089.41 5/3/2010 19.76

4/1/2010 1186.69 4/1/2010 20.85

3/1/2010 1169.43 3/1/2010 21.15

2/1/2010 1104.49 2/1/2010 19.92

1/4/2010 1073.87 1/11/2010 19.56

Positive correlation: Since the stock indexes have a linear

correlation, r is close

to +1. An r value of exactly +1 indicates a perfect positivefit. Positive values

indicate a relationship between x and y variables such that

as values for x

increases, values for y also increase.



The correlation coefficient of these two stocks is 0.7332029 this

indicates a positive

relationship. On the one hand, this is good if the stocks areincreasing,

however if they are decreasing that would not be good.

A correlation greater than 0.8 is generally described as strong,

whereas a correlation

less than 0.5 is generally described as weak . These values can

vary based upon the

"type" of data being examined.

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