Business Environment Analysis Report on China

Total Population

With China’s 1.3 billion populations it would be a good market place for multinational companies that are searching for better potential market. The large population of China would potentially provide high sales and profits to multinational firms that would successfully penetrate the Chinese market.

Population Growth Rate

Population of growth rate of China already starts to decline as the Chinese government tries to control the size of their population in a form of government policies such as the “One Child Policy”. In the near future, this would cause the decline of laborers in China and so with potential market for multinational companies.

Since the economic reform of China in the 1970’s, the Chinese government has been eager to attract foreign investors in order to stabilize their trade balance and so with their GDP which they believe, during then, would bring China impressive economic growth. This only means that foreign investors would find it easy to establish their businesses in China plus a potential support for the Chinese government in terms of subsidies.

Government Stability

China ranked 126^thon the freest economy all over the globe due to its low economic freedom on monetary, financial, investment, and property rights which makes it hard for many foreign investors to steer their businesses smoothly on the Chinese market.

Legal System

Ports

There are around 2000 ports in China composed of river ports and ocean ports while 130 of which are open for foreign ships. This large number of ports of China would make it easy for foreign investors to transport raw materials and finished products from China to other countries and vice versa.

Roads and Highways

The Chinese government is still on the process of developing its roads and highways especially those roads that would connect different provinces to major cities. It would still take a few more years before this physical infrastructure would be fully developed.

Due to its large population sixe and high disposable income of every Chinese household due to its impressive economic development for the past years, China offers great potential market to many multinational companies seeking for large number of customers. This will provide multinational companies high sales and profit from operating in China.

Trade as Share of GDP

High inflation rate has been one of the economic problems of China that it presently faces due to its fast-paced economic growth. This could either pose as beneficial or detrimental to foreign investors depending on the type of product they will sell in the Chinese market and the size of their operation in China.

CommunicationInfrastructure

Wireless Telephone Market

There are nearly 500 million mobile phone users in China and the Chinese government continues to provide subsidies for mobile phone companies to invest more in China. This high growth rate of wireless telephone industry of China would provide smooth operation to foreign investors especially when connecting overseas for international trading.

PART B

Economics

Due to the effort of the Chinese government to attract more foreign investors into their market, it has been extensively supporting the development of its communication infrastructure by providing subsidies to telephone companies. This would soon boost the business activities all over the domestic market of China.

Physical Infrastructure

At this point, it is clear based from the above mentioned statistics and arguments that the businessenvironmentof China is highly attractive despite of some negative factors. China’s economy, demographics, communication infrastructure, and physical infrastructure provides high potential return on investment to foreign investors and even to domestic investors while its government provides some glitches on the benefits that the other four factors is offering to domestic and foreign investors. Overall, after adding all the effects of the five factors, the result would be positive thereby suggesting the business environment in China is indeed highly attractive to investments.

References