The spread of globalization has led to the fact that many business operators shifted their focus from the local market to international community. Business operators are considering either exporting their goods directly to their target markets or investing in the countries themselves. However, there are several considerations that business operators should look into before venturing into any international market.
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Among the issues to be considered before establishing international markets include the overall attractiveness of the targeted countries as potential markets for investment. This includes the potential of the targeted market in terms of business opportunities and the political ideologies help by people in the targeted market.
Other factors include political stability which in turn determines the security of foreign investors in the targeted country. This paper will discuss the overall attractiveness of investing in China.
Qualities of a good market
For a market to be considered as attractive to both investors and foreign business operators, it should exhibit certain characteristics. The aim of investing or establishing a market is to earn revenue in terms of profit. This in turn will be realized through the sale of gods and services. It is, therefore, important for business operators to consider the population of the market.
The reason behind classifying population among the important factors to be considered when planning to establish a foreign market is that most business activities target people. This, therefore, means that the more people the country has, the higher the demand will be.
In our case, China is among the most populated countries of the world. This high population provides a perfect market for our consumer goods. Twenty percent of the world’s population is believed to be Chinese (Anil 2011:103).
This makes China the most populated country in the world with an approximate population of 1.3 billion people. Although China adapted the policy of one child per couple, the population in China remains high. This makes China a target of international business operators. Given that our company is dealing with sports cloths, we should consider a market with a large population of young people.
The Chinese people are historically known for their sporting activities (Scott 2011:90). This sporting tradition added to the large population in a growing economy provides an excellent market for our sporting commodities. It should also be noted that there are many business opportunities in China. This has made competition in a given commodity relatively lower compared to the markets in developed countries.
A research contacted by Anil (2011:100) indicates that many business operators in the Chinese market have specialized in providing basic needs such as food and shelter to the large population. According to this report, three quarter of international business operators in China have invested in architecture and banking business. This means that our area of specialization is free from competition.
Politics has a great influence on the economic activities of a nation. For instance, a political system that values individualism will ensure free market trade. With such a political ideology, individuals are empowered to pursue their private interests for the overall good of the society. Political stability also determines peace in a country (Plaftker 2010: 49). No business activities can thrive in a country without peace.
I chose China because it is politically stable and has a good environment for business. Political activities such as elections can impact any business in a great way. For instance, disagreements during elections can result in lawlessness in a country. In such situation, business organizations cannot continue with their operations for fear of losing their goods. A country’s currency may also be politicized leading to its loss of value.
This in turn brings depression in the country economy which may affect business negatively. It is, therefore, wise for business operators to critically analyze the country’s political trends before establishing a market.
Countries that are believed to have a stable political foundation are more attractive as compared to countries that face frequent political instabilities. Research has indicated that politically stable countries are more secure compared to politically unstable countries.
China has a strong political system based on the rule of law. The existence of a constitution which was implemented and adapted in 1982 promises internal investors and foreign traders’ security for their investments. The communist party, which is the only political organization in the country, promises to guard the rights and freedoms of all people. According to the Chinese constitution, all rights belong to people.
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This means that people have the mandate to manage their social, economic and cultural activities without unnecessary interference of the government. This is a major boost for business operations in the Chinese country (James 2009:112).
Economic status of a country
The economic statue of a country determines the nature of activities in the country. The world has categorized into three classes depending on the levels of economic development. Countries which are considered to be economically stable are referred to as developed countries while the underdeveloped countries are called third world countries.
Developing countries, on the other hand, are countries that are in the process of developing their economies. In our case, China is a developing economy and thus provides a perfect market for our consumer goods. Unlike in developed countries where the market is saturated with consumer goods, demand for consumer goods in developing countries is very high (Anil 2011:101).
On the other hand, supply for the goods in these countries is not as high as in developed nations. This combination of high demand and low supply raises the prices for our goods, thus there is high profit for our company (Marina 2010:35). The rationale for our not extending our market to underdeveloped countries is that people in these countries do not have the purchasing power for our products.
Most people in underdeveloped countries life are below the poverty line due to lack of income generating activities. Consequently, people lack disposable income and the demand for consumer goods is low.
It should be noted that business operators should not only look at the current economic status of a country but also the potential of the country’s economy to grow in the near future. China, being a developing country, has a potential for economic growth. Our entering into this potential growing economy promises our company with future positive growth (Antonio 2010:99).
Accessibility of the market
Business activities involve a lot of movement of both the goods and the traders themselves. Successful business people will search for the customers. In this case, transport and communication networks become very important factors to be considered when planning to establish a foreign market. A country with good transport and communication networks will attract foreign investors.
The rationale behind this attraction is that the business people will be able to find customers wherever they are either by taking the goods to their door steps or through advertisement using the mass media. Good infrastructure transport infrastructure in a country helps business operators to reach out to people with ease (James 2009:33).
The security of both the gods and business people is also guaranteed by good transport and communication networks in a country. China is among the most advanced countries of the world that embraces modern technology. As a result of this technologically oriented culture, China has excellent transport and communication networks.
As a matter of facts, nations of the world are now turning to borrowing technological assistance in transport and communication from the Chinese government. Good transport and communication networks in China ensure a swift transportation of goods to the market.
The communication network helps in searching for markets within China while transport networks ensure that goods reach the customers as demanded and in good shape. Many airports and air strips in China will enable us to transfer our sporting garments to the markets without delay (Fernandez 2011:88).
Competition in the market
China is among the rapid growing economies in the country. Many people are, therefore, concerned with the major development projects such as infrastructure and food production. Introducing sporting cloths in China will give us an opportunity to maximize the sell of our products.
With many business opportunities in China, business operators will specialize in different business opportunities thus leaving less competition in our area of specialization. When this possibility of few business operators are combined with the high demand for sporting cloths in China, the prices for our products will automatically go up (Frank 2008: 27).
The interpretation of this is that a lot of revenue will be collected and our company will grow. After establishing market in China, we can then reinvest more capital in order to capture the whole country. The fact that we shall be among the first to venture into the Chinese market with our unique products is an added advantage to us. As reported by our Director, our products have the potential of competing at international levels.
Entering into a market that has less players with internationally appealing products will ensure that the brand of such a product is preferred by many people in the future. Venturing into the Chinese market at this perfect time will sell our brand of sporting clothes and ensure a positive growth of our company in the future (Laurie 2009: 45).
The above discussion indicates the factors that business operators should consider before establishing a foreign market. The growth and prosperity of any business activity in a foreign country depends on the above factors. China as a country has all the above factors and, therefore, stands out to be the most attractive target for our company to contact its business activities from.
Good transport and communication networks in China will ensure that our products are taken near to the customers with easer, while the sporting tradition of the Chinese people ensures a ready market for our sporting cloths. I would, therefore, advise that we consider China as the most attractive country to start our overseas market.
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