This is the detailed PESTLE analysis of China which is important for understanding the external factors that affect the industry’s growth and profitability.
China is the leading and quickly growing country, which has strong economy and it has huge number of industry in all segments. It has proved a strong power, which is boosting its business across the world and its products are considered the affordable products. There is huge number of legal improvements, which made the business easy and quick. The foreign investors like to come to this country to invest their amounts in its industrial sector as the size of the market is enhancing and it has low cost of labor. The growth potential in China is tremendous and it is becoming the most attract part of the world.
This country has skilled and efficient work force, which is busy in their working day and night and they carry out cross border economic activities. The leading companies and brands of different countries seek it the best place and emerging economy to develop their business here. They find it easy to merge in its economy and can get ample revenue from this quickly grooming market economy.
Political Factors
China has strong political system, which can help to boost its economy. Various new regulations are passed in their congress and these formal and informal rules help the economy to become stronger. It has the effective policy for the investors to invest their amount in various industrial sectors and government is also focusing on the development of e-commerce.
The government has strong and firm commitment to flourish the business and increase the production of items of different types. The industrial sector has strong and impressive political support, which can help to boost its economies and the right and just regulations can help to keep it on the right path of growth and success.
Economic Factors
During the past five years, the economy of China got excellent growth rate in GDP and China can also continue its pace on its development. It has tremendous rate of savings, large number of skilled workers, and have the extensive export business, which contribute its success. The economic development of the country can lead this country to potential urban growth and it has the major impact on its SMEs. The GDP rate is adding more and more values to the society and it is also increasing the purchasing power of the consumer.
The companies and brand are getting boost due to cheaper labor cost and various leading companies are hiring the workers to increase their cost. The growth rate is impressive but there may be some potential trends, which can tell upon the business, and these are the high inflation rate and high property prices. The interest rate is also increasing and the reserves of the commercial banks are also higher now.
Social Factor
The demographics of population growth and fluctuation in age distribution are changed and they can play important role on the social and cultural aspects of the country. They can have great potential to change the social and cultural trends and values and there is another contribution of family size and social behavior, which have the impact on the other social factors of lifestyles, religion, education and emigration. China has attained the literacy rate up to 90% and it is playing the important role in the economic development of the country.
Internet is widely used in most of the cities and rural areas as they have quick and better access to the internet. Now they use the latest technology to do shopping online and various websites like Taobao, which is the largest e-commerce site, from where millions of people do their shopping. E-commerce changed the local consumers to do shopping and they get their desired products sitting in their homes. Some people like to do shopping physically and they like to have face to face contact in the market.
Technological Factor
There are some of the technological factors, which are involved in development of new products, purchase of new mechanism, new production technology and new mechanism of distribution like internet and new methods of working including mobile telecommunications. China has to face problems as it does not have safe online payment system, so the Chinese buyers face the higher level of uncertainty and experience the long term orientation.
It is also noted that the Chinese market has very low credit card penetration in China which is widely used across the world as the effective and fast payment method. The payment system can support this online credit card transaction but it is also used minimum. The business people think that the online credit card system for timely payment is less, which has low usage and it does not penetrate in Chinese industry.
Environmental Factor
The environmental factor has the deep impact as the people have the awareness about the environment protection. The emergence of various technological developments in the industry makes everything easy and speedy. The provision of products online can help to increase the usage of e-commerce website and do the shopping online by placing order rather than visiting the shops.
When the less number of vehicles are used then there will be less emission of pollution in the air, which can damage the environment and pollute the atmosphere around us. China is the most attractive and impressive market for the companies, which can understand the macro-environment and it can work well there.
Legal Factor
As the e-commerce is flourishing and the government has started working on the formulation of legal framework for the e-commerce. China is working on the drafting of e-commerce legislation on different aspects like intellectual property rights protection and tax. No regulations are formed to support privacy, recognize the digital signatures, validation of electronic contracts and protect the consumer rights.
The effective legislation is necessary to develop the e-commerce and prevent online cheating and theft, which is great concern for this industry to develop and work for the betterment of the industry. The legal factor plays the important role in providing latest and excellent products at the comparatively cheaper rates. With the exercise of more and more legislation in the industry, the working capacity of the industry will also increase manifolds.