A Proposal For A New Factory

1088 Words Nov 18th, 2014 5 Pages
Introduction

Longchamp is a French firm created in Paris in 1948, known for its luxury fashion leather

and canvas goods, such as handbags and luggage. Thanks to its expertise, Longchamp is

distributed in more than 275 stores worldwide.

We would like to expand our production; therefore we chose to open a new factory in

Romania. In this report, we will explain the reasons why we made this decision.

1) Tax costs
Regarding tax costs, Romania is as a highly taxed country, just like France. Indeed, income

and capital gains earned by corporation are taxed at a rate of 16%. More specifically, these

data clearly demonstrate that Romania has payments percentage and profit taxes higher

than France. Even if Romania is more taxed than France regarding corporate and income

taxes, it is the opposite scheme for labor taxes and contributions. This inversion is due to

low labor costs.

Certainly high tax costs can be a constraint to produce in this country but we choose

Romania for other reasons like the low labor cost and the proximity with our primary

market, France.

2) Legal environment

Thanks to the accession to the EU and the increasing integration in European markets,

Romania’s structural reform has progressed. Romania 's reform and liberalization process

created large foreign-exchange inflows and a positive view of Romania 's prospects.

However, the judicial power is not entirely independent. It is very influenced by the

executive…
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