Oppertunities and Threats to Uk Businesses

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OPPORTUNITIES AND THREATS TO A UK BUSINESS TO CHINA’S CONTINUED GROWTH China has grown rapidly in recent times with huge increases in GDP, a growth rate of 10.4%. This compared to the UK’s 1.4% shows the enormous difference between the two countries and the size of their growth. Businesses based in this country are now competing with other multinationals to be world leaders in many sectors. A multinational company is an enterprise operating in several countries but still only managed from one country. China has seen rapid industrialisation yet retains traditional rural areas. One consequence of this is that the benefits of growth are not shared equally and income distribution has become increasingly uneven. Starting from relatively low income levels has had two consequences. Low wages have corresponded to low labour costs for business. At the same time, low incomes have held back domestic consumption, so exporting has played a significant role in development. Not only does China have a huge GDP growth rate but they also have a large population growth rate. With their current population at 1,330 million it continues to grow at a rate of 0.65% per year. This gives them a comparative advantage over the UK as it means that they have a large, cheap abundance of labour which gives the Chinese businesses a large choice of employees and means that they can charge low wages meaning that they reduce their costs leading to profits increasing. Due to these low wage rates it enables the businesses to have an edge over their competition in the UK for example and to produce cheaper goods then their competition leading to demand increasing. It will therefore affect the UK’s balance of payment in a negative way as domestic consumers will consume more imports and this will be bad for the domestic producers. However it may also lead to many business opportunities. Firstly due to disposable income in China increasing it will lead to UK businesses selling more products into the new...
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