What consequence may Wai-tung face for selling automobiles significantly below their prices in China?

Prepare for the Legal Environment of Business 1 Exam. Utilize flashcards and multiple choice questions with detailed explanations. Sharpen your knowledge for the test and enhance your legal understanding in business!

The consequence that Wai-tung may face for selling automobiles significantly below their prices in China is the imposition of antidumping duties. Antidumping duties are tariffs that a government imposes on foreign imports priced below fair market value, typically to protect domestic industries from unfair competition. When a foreign company sells products in another market at a price lower than their normal value—often interpreted as the price in the company's home market—it can lead to significant harm to local manufacturers. As a result, the government may respond by imposing antidumping duties to level the playing field and discourage such practices.

In this scenario, selling automobiles at prices significantly below their market value could trigger an investigation and, ultimately, the application of antidumping duties by the Chinese government. This measure aims to counteract the effects of perceived unfair competition and can result in higher costs for the importer, which can deter the practice of dumping. The other options, while relevant in various trade contexts, do not directly address the specific situation of pricing below normal value leading to penalties specifically related to competitive practices in international trade.

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