Impace of External Environment to Business in China

Only available on StudyMode
  • Download(s) : 85
  • Published : February 1, 2013
Open Document
Text Preview
Table of Contents

1. IntroductionP. 1

2. Company BackgroundP. 1

3. Macro-environment

i. Political-Legal EnvironmentP. 1 - 2

ii. Economic EnvironmentP. 2

iii. Social EnvironmentP. 2

iv. Ecological EnvironmentP. 2

4. Difficulty

i. Political-Legal FactorP. 2 - 3

ii. Economic FactorP. 3

iii. Social EnvironmentP. 3

iv. Ecological EnvironmentP. 3

5. SuggestionP. 3 - 4

6. ConclusionP. 4

7. ReferenceP. 5 - 6

Introduction

Nowadays, China is experiencing a rapid economic growth. By following the end of the eleventh National People's Congress of People’s Republic of China recently, China is emphasizing to develop seven new strategic industries with the release of the Twelfth Five-Year Program. As China is achieving a low carbon economy, thus one of the new strategic industry, new energy is essential to the success of achieving the goal. Biomass energy is one of the new energy which generates electricity and biodiesel by burning agricultural straw, fruit, wood and animals waste (1). The following will be the analysis of Macro-environments for the China Light and Power Company Limited to enter the China market, and suggestions will be given at the end of the analysis.

Company Background

Champway Technology Limited is the only company who possesses an ‘Environmental Permit’ to recycle waste cooking oil in Hong Kong. Its primary objective is to recycle all local waste cooking oil and organic oil and grease into biodiesel. It contribute to save the environment by aiming at recycling all waste cooking oil in Hong Kong and stem the trend of re-using waste oil on the dinner table. It also committed to produce high quality biodiesel which is a clean and efficient fuel by using the collected waste oil (2).

Macro-environment

As China is a highly distinctive market, once foreign-invested enterprises want to enter the China market, there must be difficulties to be faced. However, there are still some favorable factors while they are entering such market, and they will be analyzed as follows.

There are four macro-environments for Champway to enter the China market. Firstly, the Champway may benefit from the political and legal environment of China. During the release of the seven new strategic industries in the Twelfth Five-Year Program, the central government has put so much emphasis on the development of new energy, especially the development of biomass energy (3). Also, the State Forestry Administration has decided to reserve two hundred million acreage of forest land, for cultivating the plants that specifically for the extraction of biodiesel (4). As a result, the operation of Champway in China can benefit from the strong support and back up by the central government when entering the China marketing with biomass energy.

Secondly, the Champway may benefit from the economic environment of China. As mentioned, China is experiencing a rapid economic growth with a GPD growth of 10.3 percent in January of 2011 (5). At the same time, Renminbi keeps appreciating against US dollar and Hong Kong dollar (6). As a result, the Champway may benefit from appreciating Renminbi, since Champway is operating business and selling energy for Renminbi in China. So the actual value of the profit gained is also appreciating. Moreover, refer to a speech of the Labor Department, the number of people seeking unemployment benefits rose by 26,000 to a seasonally adjusted 397,000 recently (7). This implies that the unemployment rate in China is rising. Thus Champway can also benefit from this circumstance as it can hire sufficient work people for their operation in China.

Thirdly, the Champway may benefit from the social environment of China. As people in mainland China become more educated and more environmental conscious (8). They are...
tracking img