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Assessment of external environment for BRIC market. Case Study: China


Introduction

Economies of different countries are inclined towards unique criteria for policy formulation, review, and implementation. As a matter of fact, these policies directly affect marketing of products in such economies. Usually, despite the existence of free market policies, economies across the globe still practice specific protectionist policies aimed at ensuring survival and ease of doing business. Business environment often experience dynamics and swings which create short and long term effect on profitability and chances of survival.

When faced with a business dilemma that requires critical decisions, economies resort to analytical tools that ensure competitive advantage besides cutting a market niche. In the last decade, China has presented itself as a steadily rising economic powerhouse due its rapid industrialization and a big market base. Thus, this reflective treatise attempts to develop a comprehensive economic and cultural profile of the Democratic Republic of China. Besides, the profile is reviewed on scale on ease of marketing in China.

Economic Profile

China country occupies 5,026 kilometers in the Asian Continent. Interestingly, most of the population in China dwells within the geographical region of central plains which is close to the expansive inland market. Almost 19,000 kilometers of the coastline stretch supports tourism and export-import oriented trade.

China is among the few countries in the present times that practices communism, despite predominance of capitalism. Being a communist economic system, the government of China monitors and actively intervenes in its economic sectors. However, “the catch-up economic growth in China in the reform period has been characterized by a pattern of concentrated growth and uneven development, which is not only inherently unbalanced but is also intrinsic to the process and structure of modern economic growth” (Deer & Song, 2012, p. 4).

China presents itself as an emerging economy in the sectors of industry and service delivery. According to Cai (2012), “in 2010, China became the world’s second largest economy and its per capita GDP reached US$4382, which means that it has just become an upper middle-income country, as categorised by the World Bank” (Cai, 2012, p. 56).

Despite the inspiring three decades of economic reforms, and stable economic growth, living standards and wealth distribution are still under balanced, especially in the rural parts of China. Reflectively, “budget revenue grew at an average annual rate of 13.45 percent, from 113.226 billion Yuan to 5.13 trillion Yuan, an increase of more than 700 percent after adjusting for inflation” (Song, 2012, p. 108). This has relatively improved the living standards for majority of the population.

At present, those living below poverty level have reduced from 300 million in 2005 to 23 million in 2009 (Zhu & Wan, 2012, p. 100). In fact, “China’s overall performance in virtually all health indicators, assessed by the United Nations, surpasses developing country averages by wide margins” (Zhu & Wan, 2012, p. 102).

The comprehensive medical cover plan implemented by the government has ensured healthy working force. Surprisingly, the Gini coefficient of China stands at 0.47 digits, which is almost 0.1 higher than the UN recommended coefficient ratio. Moreover, 21.5 million Chinese still face shortages in basic needs. Factoring the parameter of the World Bank, China has more than 100 million people living below the one dollar per day mark (Zou & Lui, 2011, p. 46).

Reflectively, China’s economy is run by the single party communist government which operates actively on unique totalitarian governance that has direct influence on social, business, and ideological inclinations. China’s real GDP has steadily grown at 9.8%, translating into a per capita GDP of 15,973 yuan (Kuwamori & Kuroiwa, 2011, pp. 13).

China has managed to maintain the tag of a top industrialist and retail business leader, despite being considered a developing country. In 2010, China earned foreign exchange worth $1.429 trillion from exports to Japan, Hong Kong, South Korea, US, and Germany. Its imports from these countries totaled to $921.5 billion.

China’s main export products include machinery, apparel, electrical appliances, data equipments, iron, medical, and optical equipment. China’s main partners in the import transactions are South Korea, Germany, US, Hong Kong and Japan (Song, 2012, p. 109). The government of China has created incentives that help in creating domestic and international business links. Fourthly, the system ensures that there is creation of independent business policies for the state.

This helps in setting and dealing with the economic policies that create desirable economic conditions in the economy (Bucknall, 2000). However, the high initial capital requirements have inhibited the numbers of new entries recorded over the decades as China remains established and profitable only to large scale businesses that benefit from the economies of scale.

Though this economy experienced substantial output growth, this was at lower level in comparison to emergence of good financial infrastructures. The focus on the broader aggregates in economy helps to uncover the role offered by the financial institutions towards realization of rapid growth.

This comes with the smaller commercial, service, and the producing sectors. Reflectively, the single communist party is a populist Chinese outfit associated with libertarian and conservative inclinations on political and economic policy implementation and functionality (Kuwamori & Kuroiwa, 2011, pp. 16).

As a movement, this association has direct influence on political future of China and policies debated and passed by the government. Specifically, resounding interest surround the influence of foreign currency on the Yuan as a protectionist assembly of tools for mass influence. This community perceive themselves as true Chinese who would do anything to protect and reaffirm the constitutional founding upon which their nation was laid by statement.

The communist party movement consists of members drawn from all professional fields. Though China is at same economic level with other BRIC countries, it plays a bigger role as a retail business leader and industrialist due to its expansive market (Deer & Song, 2012, p. 8).

China has managed to make basic education compulsory and absolutely free. This has been instituted in its various legal amendment bills that have been passed in the last ten years. Interestingly, “since the Compulsory Education Law was implemented, labor quality has improved substantially, with a decline of the illiteracy rate of rural labor from 28 percent in 1985 to10 percent in 1997” (Song, 2012, p. 106).

To optimize from the favorable business climate created by China, the government has established a competitive price policy which makes good as cheaper as the available cheap labor offered. In the first place, Yuan currency is stronger in China and competes fairly with other major currencies like the Euro and the dollar, due to economic functionality influence the Chinese government has created to attract trade in Yuan currency.

Besides, several export processing zone are allocated to foreign investors and business trying to exploit the ready market. In a partnership affiliation, China has established a rapidly growing relationship with local and foreign business in order to make business operations sustainable.

To create an optimal and sustainable business environment, governments across the globe are in the first late to implement and review business policies to match with the need for environmental sustainability. In response, and to avoid the excessive fines imposed upon exceeding a carbon emission limit, China has fully embraced green manufacturing techniques which are convenient to its customers (Zou & Lui, 2011, p. 48).

As noted by Zou & Lui (2011), the relationship between private businesses and banking sectors and private businesses in China is credited for the current admirable entrepreneurship levels. Despite the rugged terrain, China has favorable climate for agriculture and is rich in mineral resources, forestry, tourism, and hydropower. China has extensive road transport network, sea transport network, and a modernized air freight system.

Besides, the rail system has penetrated most of the regions which support agriculture and manufacturing industries (Zhu & Wan, 2012, p. 98). As a motivating factor, tax exemptions, clear environment certificates and clear bill of health is issued to agents who have these interests at heart in China (Zhu & Wan, 2012, p. 100).

China has been practicing fixed exchange rate financial system. However, in the recent past, this has been replaced by a floating financial system which has ensured steady appreciation of the Yuan currency in the global business arena. The stability in Yuan has placed China in the strong business zone that was once a preserve of the US and other first world giants. With the itching economic climate, stable Yuan currency has positively affected people across the spheres of the Chinese economy. As part of the contagion gain, Yuan’s instability is threatening to reverse stimulus gains of China due to presence of hundreds of millions of hot money (Zhu & Wan, 2012, p. 103).

Besides, China has commenced its strategic plan of remodeling the quality assurance and control to suit the current cyclones of the financial market as a policy for relative competitiveness. These efforts are geared towards creating a self sufficient business system which can survive in the international market trade (Zhan & Zhan, 2012, p. 40).

Competition generally determines the profit margin. Therefore, established companies may be in a better position to compete those weak firms. As a result, this aspect has a very strong influence on survival and performance of firms in China since it has integrated the ability to survive and thrive amidst competition through tailoring of its friendly packages (Kuwamori & Kuroiwa, 2011, pp. 14-15).

Social and Cultural Environment

Culture is an acquired compliment of a long interactive process. It depends on period of time in which an individual is exposed to the interactive process and level of internalization of the subculture. Reflectively, culture varies from one geographic region to another. Besides, subcultures are unique in terms of beliefs, practices, and communicative gestures or language.

This community perceive themselves as true Chinese who would do anything to protect and reaffirm the constitutional founding upon which their nation was laid by statement. The complexity of social identity includes concepts such as self-perception and self-definition. It also involves psychological and mental development, relationships between people, ability to adapt, and empowerment. Fortunately, these aspects are internalized by the friendly Chinese who will double up as consumers (Ambler, 2000).

Life Expectancy

Life expectancy in China currently stands at 78 years, and the same is projected to rise to 80 by 2050 (Pang & Lui, 2011, p.30). As fertility rate decreases and longevity increases, those in the age bracket of 60 years and above are expected to form the majority in workforce. At present, 37% of those in the above age bracket are in active employment. Thus, population aging in this country can be attributed to decreased fertility rate, rising life expectancy ratio, and dynamics within the age structure.

Culture is an acquired compliment of a long interactive process. It depends on period of time in which an individual is exposed to the interactive process and level of internalization of the subculture. Reflectively, culture varies from one geographic region to another. Besides, subcultures are unique in terms of beliefs, practices, and communicative gestures or language.

Chinese culture influences demographic dynamics and defines physical and spiritual interactive traits of its members who are united by a sense of belonging and desire for identity. Subcultures in China are unique in practices surrounding language, dressing style, religious affiliation, and philosophical beliefs (Firzli, 2011, p. 65).

Quality of life

The democratic republic of China has stuck to communist system of governance characterized by balancing government policies with social welfare as the determinants factors. Reflectively, these policies are spread in policy formulation, review, implementation, and projection.

At macro and micro levels, the continuous rise in economic and political balance have ensured steady portfolio in form of input-outputs. Overtime, these policies have ensured expansion of the Chinese market and serialization to factor in the need for competitive pricing mechanism. However, unemployment remains at 14% with the poorest families having a household income of 5,000 Yuan (Xiaowen, 2001, p. 102).

Population Pattern

Almost one fifth of the world population dwells in China. The geographically huge country has very advanced civilization system which has existed for almost three millennia. The strong patriarchal hierarchical structure of family unit in China has been around for more than two and a half millennia as recorder in the Confucianism philosophy.

The population of China stands at 1.35 billion and is projected to grow at 2.5 percent per annum. Due to the large population momentum, the big population provides easily available labor and ready market for finished product as they form the consumer bracket.

Conclusively, China offers a strategic location for establishment, expansion, and operation of businesses. The emerging economy of China has surpassed that of the other BRIC countries. China is run by a single party communist government and most of its public goods are nationalized, including exploitations of resources such as minerals, electricity power, and transportation. Currently, this country has the largest population and a life expectancy rate of 78 years.

Poverty levels are below 30%. Education and healthcare are very affordable due to subsidies by the government. As a result, there is an abundant, affordable, and highly skilled labor market and government commitment to ensure policies are fair to businesses. Thus, this country is a potential region for investment due to its economic stability, ready market, and the untapped market.

Reference List

Ambler, T 2000, “Doing Business in China”, Economic Policy Journal, Vol. 11, no 3, 25

Cai, F 2012, “Is There a “Middle-income Trap”? Theories, Experiences and Relevance to China”, China & World Economy, vol. 20 no 1, 41-61.

Deer, L & Song, L 2012, “China’s Approach to Rebalancing: A Conceptual and Policy Framework”, China & World Economy, vol. 20 no 1, 1-26

Firzli, N 2011, “Forecasting the future: The BRICs and the China Model”, USAK Research Journal, vol. 2 no 1, 60-74.

Kuwamori, H & Kuroiwa, I 2011, “Impact of the US Economic Crisis on East Asian Economies: Production Networks and Triangular Trade through Chinese Mainland”, China & World Economy, vol. 19, no 6, 1–18.

Pang, C & Lui, J 2011, “Evidence on the Effects of Money Growth on Inflation with Regime Switching”, China & World Economy , Vol. 19, no 6, 19–36.

Song, Y 2012, “Poverty Reduction in China: The Contribution of Popularizing Primary Education” China & World Economy, vol. 20 no 1, 105-122.

Xiaowen, T 2001, Managing international business in China, Cambridge University, Cambridge

Zhan, J & Zhan, Y 2012, “Foreign Value-added in China’s Manufactured Exports: Implications for China’s Trade Imbalance”, China & World Economy, vol. 20 no 1, 27

Zhu, C & Wan, G 2012, “Rising Inequality in China and the Move to a Balanced Economy”, China & World Economy, vol. 20 no 1, 83-104.

Zou, W & Lui, Y 2011, “Rural–urban Migration and Dynamics of Income Distribution in China: A Non–parametric Approach”, China & World Economy, Vol. 19, no 6, 37–55.

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IvyPanda. (2020, July 6). Assessment of external environment for BRIC market. Case Study: China. Retrieved from https://ivypanda.com/essays/assessment-of-external-environment-for-bric-market-case-study-china-essay/

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"Assessment of external environment for BRIC market. Case Study: China." IvyPanda, 6 July 2020, ivypanda.com/essays/assessment-of-external-environment-for-bric-market-case-study-china-essay/.

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IvyPanda. "Assessment of external environment for BRIC market. Case Study: China." July 6, 2020. https://ivypanda.com/essays/assessment-of-external-environment-for-bric-market-case-study-china-essay/.

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IvyPanda. 2020. "Assessment of external environment for BRIC market. Case Study: China." July 6, 2020. https://ivypanda.com/essays/assessment-of-external-environment-for-bric-market-case-study-china-essay/.

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IvyPanda. (2020) 'Assessment of external environment for BRIC market. Case Study: China'. 6 July.

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