HKNDs Project in Nicaragua Harvard Case Solution & Analysis

Nowadays, most of the international trading is done via sea through ships loaded with containers or fuels. In addition to this, Panama Canal provides shortcuts for the bulk carriers between Pacific and Atlantic oceans. HKND is a company based in Hong Kong it has 50 years concessions. HKND was successful in winning the approval of Nicaragua for constructing the canal across Nicaragua as an alternative to the Panama Canal. There was a need of the canal as it was observed that the Panama Canal was proving to be small for the increasing size of ships and the goods carried by the Ships.

HKND’s chief executive, Wang Jing is one of the richest people in the world, having net worth of $1.4 billion. Mr. Wang, who is known as the telecom tycoon and one of the world’s richest men, is determined to provide finance for building the canal and operating the Nicaragua Canal. This mega project will cost around $40 billion.The Nicaragua Canal will be situated along the route between the Gulf of Mexico, South Korea and Japan.The company proposed a project of the Canal in Nicaragua in order to gain many benefits such as; this canal will be an alternative of the Panama Canal and it will provide a short route to the fuel cargoes which are time sensitive.

It will also be helpful for the coal suppliers from the eastern US and Columbia, that they supply coal and steel to Asian countries for the generation of power and steel production, as this canal will offer a new maritime route, and hence, will be a shortcut for the bigger bulk carriers to transport cargo.Through this canal the Americans can fulfill the increasing demands of livestock and agriculture in Asia, hence, the canal will help in smooth and efficient gateway. Wang lacked the experience of conducting the large-scale infrastructure projects like this, but as he was willing to initiate this project in Nicaragua he was able to convince government of Nicaragua for the project. This project will increase the international trade and also cut the cost for transportation of the goods.

Whereas, Nicaragua is the poorest country in Central America and it is also the second poorest country in the entire Western Hemisphere. It is planned that this project will include seaports, an airport, and freight railroad and free-trade zones. Thus, the project will increase the economy of Nicaragua and also eliminate the poverty. The project was also criticized in a way that this project is being backed up by the Chinese government and they are increasing their influence in the region through this project which was opposed by the people of that region.

According to the liberalism perspective the government of Nicaragua should favor Canal in Nicaragua in order to increase the development of the country and give boom to the countries’ economy. It was always dreamed that the canal should be built across Nicaragua that would provide several benefits to the shipping companies and countries in Asia.

Unfortunately, Nicaragua lost the bid to Panama. Panama was though built between Pacific and Atlantic Oceans, but still people were interested in building the canal across Nicaragua as it seemed to be a golden opportunity for investing in the project and earning profit from it. The government of Nicaragua knows that the canal project will be a change for the country. It seemed to be an opportunity for the country as this project will increase the development in the country, it will give rise to the employment opportunities through the project, the increasing poverty in the country would be lifted off and secure the economy of Nicaragua. Moreover, the dominance of the foreign investors in the company will be lifted and the government will have hold of its country's economy. Approving the memorandum of understanding between Nicaragua and Chinese, it will be positive for the growth of the country and the country can achieve what it has been for a long time. It is believed that the project will help Nicaragua to be the third-fastest growing economy in the world. As this mega project also included many other projects by the HKND in order to give boost to the economy of the country. According to the liberal's perspective, it is observed that due to this project the Nicaraguans will reach the growth rate of 15% in 2015..............................

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