PEST ANALYSIS OF CHINA I .I n t r o d u c t i o n Nowadays, China has become one of the world’s most attractive locations and China’s rise carries enormous significant for the international business communities. China has a very gooddevelopment in term of legal system, the size of the market, the low cost of labor and China’sgrowth potential together offer unprecedented business opportunities for foreign investor to do business in China.I n t e r n a t i o n a l b u s i n e s s h a v e d e v e l o p e d v e r y r a p i d l y i n C h i n a a n d t o d a y , C h i n a b e c o m e increasingly integrated with other parts of the world and opened up to a whole range of cross- border economic activities. Managing an international business in China is not an easy task andthere are some challenges will be occurred . The prime challenge for those interested in doing business in China is achieving their strategic objectives of cost reduction, local differentiationa n d t h e s t r e n g t h e n i n g o f c o r e c o m p e t e n c i e s i n t h e i r s p e c i f i c f u n c t i o n a l a r e a s a n d b u s i n e s s activities. China is the formal member of World Trade Organization (WTO) since 2001 and from thedate, China enjoyed all the rights the WTO gives to other members and full participates in WTOactivities. China's entry will benefit its national economy, as well as encourage global economicg r o w t h a n d t h e i m p r o v e m e n t o f t h e m u l t i l a t e r a l t r a d e s ys t e m . W T O m e m b e r s h i p o p e n s u p China’s market for more international trade and investment, and opens up the world economy for China’s exports.This report will cover the reason for doing business in China, defines and identify the macroenvironment of China in term of political, economic, social and technology factors in order to do business in China and the impact of China on joining WTO China’s economy has experienced a strong annual G DP growth rate of 10% during the last five years. It is expected to continue its growth momentum and surpass the US in GDP by 2020. A high rate of savings, abundant and increasingly skilled labor, healthy export business, and potential urban growth is likely to drive the Chinese economy to sustained growth during 2012- 2017. rising income inequality. investors. offers significant opportunities for growth. Sociological. performed a Political. The report also indicates that large-scale production diminishes production costs. and strategic decisions. and growing environmental concerns. insights. Features of This Report: To make business. useful information.Trend of savings and investments as well as consumption expenditure in percentage of GDP . Legal. Successive governments’ focus on reform processes and simplification of China’s tax law and FDI procedures makes China an ideal destination for investment and growth.Trend and forecast of real GDP growth rate . large and growing environmental impact of its industrialization. regional disparity. This report will save hundreds of hours of your own personal research time and will significantly benefit you in expanding your business in this market. executives. In today’s stringent economy. Technological. Economical. investment. This market report fulfills this core need and is an indispensable reference guide for multinational materials suppliers. and many more that operate in this market. Lucintel’s study outlines China’s need to address several significant challenges and risks. and tools needed to identify new growth opportunities and operate your business successfully in this market. and stubborn external imbalances for its transformation into a leader of the global economy. foreign direct investment (FDI) has proven to be the driving force for China’s ongoing economic growth. you need every advantage that you can find. and permitting formation of industry clusters and business groups. The large and expanding market of China is attracting leading multinationals. and Environmental (PESTLE) analysis of China and presents its findings in “PESTLE Analysis of China 2012.Lucintel. a leading global management consulting and market research firm. This unique report from Lucintel will provide you with valuable information. The Chinese economy is plagued by challenges from the European economic crisis that could adversely affect its growth rate. you need timely. such as its aging society.Trend of consumption expenditure as percentage of GDP . however. Some of the features of PESTLE Analysis of China 2012 include: .” As indicated in the study. Rapid economic development and accelerated domestic demand in China. leading to less-expensive exports. China’s strong presence as an export platform supports income and employment growth in the economy. encouraging local innovators. distributors. product manufacturers. allowing domestic manufacturers to produce lowcost products. Budgeting .Personnel training . and consultants. .Business development .Trend of growth of population and unemployment rate in china .Business presentation .Determination of market size and trend .Competitive analysis .Investment decision . investors.. This multiclient market study from Lucintel is used by small to multi-national Fortune 500 companies and utilized for a variety of reasons as follows.R&D and technological factor of China 2012 Who Can Benefit From This Report? This study is intended for material suppliers. executives.Strategic planning . Environmental analysis. China has a population of 1. the Chinese population has a much higher literacy rate (for example. China's current labor force is a little over 800 million.Tagged: A PESTLE Analysis On Chinese market (ECommerce Sector). Economic conditions.no comments This Assignment Is Published With Permission From The Author For Online Review Only All Rights Reserved @ ChinaAbout. social and cultural conditions. Economic analysis. A recent study by the Global Wind Energy Council predicted it may have installed capacity of 122 gigawatts by 2020. which will come into force early next year. This means over 300 million Chinese workers are still low tech farmers. p. Political and legal analysis. And it is claimed that the political force is probably the most turbulent force in the .STRENGTH WIND AND SOLAR ENERGY "China's government has passed a renewable energy law which is intended to increase production of energy from sustainable sources. PESTLE Analysis. or about 4 times larger than the population of the United States. The law. seeks to increase the usage of solar and wind power to 10% of China's total consumption by 2010." POPULATION/ CHEAP LABOUR Today. 2013 . equivalent to the capacity of five Three Gorges dams. technological conditions and environment related issues. Political and legal analysis Political factors include government regulations and legal issues and define both formal and informal rules under which firm must operate. This would equate to around 60 gigawatts.3 billion people.Sample of English Assignments By Chinese Students . Over 40% of those 800 million workers still work in agriculture.39) that there are no pure factors because these factors are interlinked. Technological analysis . In the following we will execute a PESTLE Analysis on the E-Commerce sector of the Chinese market. a number that is greater than two times the total work force of the United States. So as you can see china still has a large untapped source of cheap labor and compared with most other developing countries.Net The PESTLE Analysis is a common approach for examining the general business environment in order to manage the future opportunities and threats from probable changes in the environment (Mullins 2002) by analyzing the Political and legal conditions. China's wind market is one of the fastest growing in the world with the exception of the US. And as proposed by Neil Botten (2008. China's 91% versus India's 61% according to the CIA World Fact Book) making china a source of highly trained labor as wel A PESTLE Analysis On Chinese market (E-Commerce Sector) February 25. Social and cultural analysis. commerce legislation for issues such as transactional security. movements and age distribution will be important. Social and cultural analysis To understand the social and cultural environment involves close analysis of the society. indicating that each people is creating more and more values to the society resulting in the increase of the individual consumers’ purchasing power. employment level. the “application of e-commerce platform technology” has been listed as a key point (Li 2010. p. down from a three-year high of 6. Though the economic situation is seems to be good. Figure 2 Growth of China GDP per capita in the new century Source: The World Bank Group 2011 Above is the growth trend of the GDP per capita of China in the new century.environment (Fahey & Narayanan 1986).1 per cent from a year earlier in September. increased by more than 13 per cent. as will changes in cultural values and social trends such as family size and social behaviors (Dransfield 2005. has increased interest rates five times over the past year an d increased the reserve requirement for commercial banks for nine times. The central bank of China. the country has sustained a continual rapid growth in term of GDP per person. intellectual property rights protection and tax. Politically sensitive food prices. the consumer price index rose 6. But the legal system of China does develop quickly to meet the needs of the e-commerce.60). Economic analysis Any development in the economic part of a country’s environment could have significant impacts on the SMEs and their activities. And regulations supporting areas critical to the development of e-commerce such as the privacy. interest rate. China has limited experience with drafting e. In the past one decade. Demographic changes such as population growth. In term of the legal system. monetary and fiscal policies. for example. the Chinese legal framework for e-commerce is still in its nascent stage and has already experienced several problems. the People’s Bank of China.270). Such factors could include: . the Chinese government attaches great importance and focus to the development of e-commerce in the most populous country. and validation of electronic contracts and recognition of digital signatures have yet to be written (Kariyawasam 2011. banking policies an investment and so on (Analoui & Karami 2003. exchange rate.5 per cent in July.75). the economic development does slow down a little and also with worrying trends such as high inflation rate and high property prices. on issuing the Summaries of the Middle/Long Term Science and Technology Development Plans of China and the Development of Information Industry Plans in the Eleventh Five-year and Long Plan in 2020 Years in The Ministry of Information Industry. however. and at the same time also asking banks to reduce lending and imposing limits on home purchases to curb property and consumer prices (Anderlini 2011). These factors include the total GNP trend. p. similar to the indicator GDP. GDP per head. According to the most recent news. energy and raw materials availability and cost.260). consumer rights. inflation rate. The overall economy has now slowed for three consecutive quarters – largely the result of BeiJing’s efforts to cool growth and dampen inflation. p. p. there are growing people having Internet access and use the Internet to do shopping. But like many other physical shopping. What is more. According to Boston Consulting Group.co. 185 million made at least one online purchase. China’s 420 million Internet users spend around a billion hours each day online and last year.39). the largest B2C e-commerce website. it is more social than a hard sell. p. In 2010. Technological analysis Technological factors include areas such as new products being developed. Environmental analysis . extra-net). mobile telecommunications) (Botten 2009. And the lack of safe online credit card payment system is one of the key reasons behind this low usage and penetration. based on the perspective of Ortolani (2005) there had been only 1 percent credit card penetration in China suggesting that the most widely used payment method had low acceptance in China and the payment system to support online credit card transaction is also facing low usage. China’s online shopping industry had a turnover of $80bn. and grew 87% year-on-year.uk 2011). new production technology. And also according to Patricia Ordóñez de Pablos and Miltiadis D. One technological problem that hinder the development of the Chinese B2C industry is the lack of a stable and secure online payment systems and this problem is further strengthened by the Chinese consumers’ preference for high Uncertainty Avoidance Index (UAI) and high Long Term Orientation (LTO) (Hofstede 1997). cheating and fake products are common in the online shops though the most populous shops tend to sell quality and price competitive products to the customers or will state clearly the possible quality problems of the products in the introduction of the products in the pages. Many people have called themselves the Taobaoer by spending much of their monthly expenditure on Taobao. new purchasing mechanisms (intranet.406) In Chinese business there is often a need and expectation for face to face contact to exist in order to build up a sense of trust which is related to the Hofstede’s notion of individualism-collectivism in which the Chinese culture is considered as having a high collective scores (Hofstede 1997). Lytras (2009 p. new distribution mechanisms (Internet) and new methods of working (e. It’s a new engaging experience to savour (bbc. the volume is expected to increase fourfold by 2015.g.Consumer Environmental Demographic Education Immigration/Emigration Religion lifestyles issues issues With the rapid economic growth. And E-commerce has already been changing the way Chinese consumers think about shopping: online. p. Here based on the analysis we have above. income level and also the degradation of environment in the country. Firstly. geographical position.157). we are able to draw some conclusions. but is not limited to weather. in the recent years. we are witnessing an increasing environmental awareness in the public resulting in changes in the consumer behaviors to put environment protection in a higher importance level (Heggelund 2004. influenced or determined by the surrounding environment. Conclusion of the PESTLE analysis As proposed by Björn Möller (2010. there are also risks such as lack of trust. p. companies would have the possibility to understand the external macro-environment in which they operate and might operate in the future. . Despite the fact that the environmental protection work is still low in China because the majority of focus and priority had been attributed to the alleviation of poverty and economic development which result in the low public participation in the environmental protection work.6). with the help of the PESTLE. radio and tv. stable and secured online payment systems and lack of legal protection that create challenges and uncertainties to the players in the industry.Environmental factors refer to all the factors directly related. very stable political conditions and rapid economic growth has made the e-commerce industry in China attractive to investors and the increasing awareness of environment protection also promote the way of e-commerce as it creates less pollution and damage to the environment. This includes. climate. climate change and even insurance (Heldman 2011). with the substantial economic advancement and raised living standard. And with a joint effort from the non-governmental organizations (NGOs) and media such as newspapers. secondly. the Chinese government has started educate the public about the environmental protection.