1) Why do you think that the Chinese apparently have a cost advantage in the production of pencils?

Chinese have cost advantage as their production was huge.They followed quantity method by selling more quantity they made their impact. Profit margin was less but it was made up with the help of larg quantity of sale. The production capacity of china was better than any other there for china has cost benefit in their favor.

2) Why has Dixon become a multinational company? What are the economic benefits to Dixon of going global?

Dixon become a multinational company because they implied their policies in large way they shifted their plat from us. To Mexico they started subsidiary with china which was a very major decision which played very important role in the success of Dixon. They also depend on eraser from Korea. The main reason is their Chinese subsidiary sold their product intermediately.

3) Why does it not simply imports finished pencils from China to the United states, instead of making those pencils in Mexico?

The plant which they built in Mexico was doing great and also the manufacturing unit for making graphire lead was still in USA. They have shut their plant which was running in USA. They tried to captured market working from Mexico as well as in form of Chinese subsidiary.