China Swot Analysis

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SWOT Analysis

Outlines the strengths, weaknesses, opportunities, and threats of mainland China from cultural, demographic, economic, social, political, and legal perspectives.

TABLE 1 - SWOT ANALYSIS - STRENGTHS

Growth

* National strength since reform in 1978.
* Accelerated economic development.
* Increased comprehensive national strength. GNP increasing an average of 9% annually (Benson, 1996) and ranked third in the world. * Export growth of 25% and imports up 15%.
* Will continue to dominate light and medium-tech industries because of the large market in China and the pool of labor.

Key Money Recipient and Direct Foreign
Investment

* Leads world in direct foreign investment - $135 billion (Taninecz, 1996). Foreign invested companies represented 31.5% of all China's exports (or about $46.9 billion). This netted about $8.4 billion in taxes (Taninecz, 1996 and "China: The Numbers Game," 1995.

* Moving to a market economy.
* Will be one of the world's six largest economies by 2020 with Japan, Indonesia, India, and Korea and the U.S., according to the World Bank.

National Resources

* Rich reserves of natural resources.
* Chinese prefer to work with U.S. companies for oil exploration and coal mine development. * Chinese allow compensation, trade, or cooperative development for ventures.

Large Population Base and Potential Customers

* Per capita consumption is low, but with a large population, opportunity is incredible, especially for low-end products. Also represents large future potential as buying power is increasing rapidly. Strong materialistic outlook, as citizens abandon the original collective party doctrine. * 1.2 billion citizens in China ("Coke Pours Into Asia," 1996) and 2.75 billion in the Asian Pacific Region which equals 10 times the population of the U.S. * Large consumer base as well as a low labor cost factor.

* World's most lucrative market (Schafer, 1996) of which China represents one-sixth of the world's population (Taninecz, 1996).

Available Labor Base

* Surplus labor in rural areas and impoverished farm lands (Gao, 1994) and growing 10 million per year.Estimated to reach 250 million by 2000. * Lower wages than Japan and Taiwan.
* Source of valuable competitive advantage, providing growth and higher margins.
* Good shift from U.S. for manufacturing traditional (labor-intensive) products.

Favorable Government Policies

* Committed to economic growth at the national policy level. * Overseas-funded enterprises are granted equal status as domestic enterprises for taxes, sales, transportation, purchase, distribution, and operations.

WEAKNESSES

Bottlenecks

* Hard to control distribution of products ("Coke Pours..", 1996). * Some disorder in the financial sector.
* Energy, transportation, and important raw materials have remained issues slowing growth. * Agriculture lacks staying power. Production in cities has displaced rural workers. Average inflation is 15%, and surplus labor has resulted in rising unemployment and inequalities in income distribution (Benson, 1996). * Outdated equipment and technology.

* Wage growth has not kept pace with inflation.

Infrastructure

* Railways, roads, communications, and power supply are below standard. * Employees need customer service training.
* Roads are jammed with thousands of bicycles, buses, trucks, and taxis. * World Bank calculates East Asia needs to invest between $1.2 to $ 1.5 trillion dollars in roads, ports, telecommunications, and power systems during the next decade.

Education

* College and University student enrollment of 2% is less than the 8% average of other developing countries (Jing, 1993).
* 180 million illiterates or semi-illiterates over the age of 15. Average schooling term nationwide is only 6 years.
* Little concept of maintenance or quality control.
* Employees could lack the productivity and innovation to guarantee continuous growth ("Time for a...
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