Preliminary discussions with the Chinese government reveal some major terms of the agreement that it would like to include: (1) Darby will enter into a joint venture with a local Chinese firm to...

Preliminary discussions with the Chinese government reveal some major terms of the agreement that it would like to include: (1) Darby will enter into a joint venture with a local Chinese firm to manufacture the phones to Darby’s specifications; (2) these phones will be sold throughout China at a 100 percent markup, and Darby will receive 10 percent of the profits; (3) Darby will invest $35 million in building the manufacturing facility, and these costs will be recovered over a five-year period; and (4) the government in Beijing will guarantee that at least 100,000 phones are sold every year, or it will purchase the difference.