PESTEL Analysis of Food Souvenir Industry in Macau
Bejing Visa Policy: The GDP of Macau is expected to increase by 30% this year which indicates that the economy is recovering from 2008 recession. That means, if the economy keeps its same speed, Central govt. might bring some new policy on visa restriction for Chinese visitors similar to that of 2008 & 2007. If the central govt. observes any negative impact of the gaming boom, they might tighten the visa policy.
International pressure group: Macau Govt. has set the 1:1 employment ratio between local and imported labor. This ratio requirement has prevented some large scale projects to accelerate their construction and operation program. The visit by the top US diplomat in last month indicates that they are pressuring Govt. to change the ratio and to assist them in hiring necessary workers to build and run the casinos.
Government Policies: different international brand, organizations, and institutions, such as British Chamber of commerce and SMEs, operating business in macau are pressuring Govt, to allow them to import skilled foreign labor because macau lacks the necessary labor force.
Funding, grants and initiatives: Last month macau recorded the highest trade deficits ever, 3.2 billion. Since macau exports service, it is unlikely the impact will be high on economy. At the same time Govt. is looking to diversify the economy. Therefore, govt. might provide some grants or initiatives such as tax benefits or low rate funding to the manufacturers and exporters.
Economy of Scale: As the technology is getting advanced there has been introduction of new machineries all the time. Due to introduction of this machineries the production has increased tremendously then it was few years ago. The economy of scale is extremely important in this kind of industry. Scale effects on producing, marketing and distributing.
Internet: As the number of internet users are growing as well as the Macau food souvenir industry is getting popular both domestically and internationally, this technology could be used to reach consumers globally and to cut the total cost.
Global Economy: Since Macau is the tourist destination, it is most vulnerable to the world and regional economy. A delayed recovery of the US and EU economies is affecting china. China is the dependent on exports and it is the Macau’s main supply market. Another wave of economy turmoil may come in. So the food Souvenir Company must pay attention on this.
Exchange rate: The US and other western countries are claiming that the tightly regulated and allegedly undervalued currency gave China and its exporters an artificial advantage over US manufacturers. China is deliberately undervaluing its currency about 40% than US Dollar which gives Chinese Made goods an unfair price advantage in international market. If it is true, it is likely that the Yuan is going to appreciate at least 40% in coming future. But, as per Wen Jiabao, the prime minister of China, speaking in UN convention, if Beijing were to allow the Yuan to appreciate by 20 to 40%, as same US politicians have demanded, a wave of job losses and business bankruptcies would engulf the mainland, causing major turbulence in society. Looking from this side, China is unlikely to allow the Yuan to appreciate in such fast pace. From the economic point of view, there will be both positive and negative effects in Macau market if the Yuan is allowed to appreciate. The positive is Chinese people will have more purchasing power, the main source of visitors for Macau. As a result, influx of people will arrive in Macau as visitors. More the visitors, more the business will be prosperous. On the contrary, the negative of the Yuan appreciation is the ingredients and other supplies from china will be expensive thereby the total unit cost of production.
Inflation: the inflation is coming back again uplifting by appreciation of Chinese...
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