Pest: Economics and China

Topics: Economics, Economy, Economic system Pages: 7 (2267 words) Published: October 14, 2014

I.Introduction Nowadays, China has become one of the world’s most attractive locations and China’s risecarries enormous significant for the international business communities. China has a very gooddevelopment in term of legal system, the size of the market, the low cost of labor and China’sgrowth potential together offer unprecedented business opportunities for foreign investor to do business in China.International business have developed very rapidly in China and today, China becomeincreasingly integrated with other parts of the world and opened up to a whole range of cross- border economic activities. Managing an international business in China is not an easy task andthere are some challenges will be occurred. The prime challenge for those interested in doing business in China is achieving their strategic objectives of cost reduction, local differentiationand the strengthening of core competencies in their specific functional areas and businessactivities.China is the formal member of World Trade Organization (WTO) since 2001 and from thedate, China enjoyed all the rights the WTO gives to other members and full participates in WTOactivities. China's entry will benefit its national economy, as well as encourage global economicgrowth and the improvement of the multilateral trade system. WTO membership opens upChina’s market for more international trade and investment, and opens up the world economy for China’s exports.This report will cover the reason for doing business in China, defines and identify the macroenvironment of China in term of political, economic, social and technology factors in order to do business in China and the impact of China on joining WTO olitical Environment of China

The Chinese political system characterized as one-party communist dictatorship makes a great contribution to national stability, enabling the economy keep dynamic and sustainable. Nevertheless, when the economic system was deregulated from the command economy to market economy since 1978, the power of economic management was increasingly decentralized, raising the issue of uncoordinated development of regional economy. Currently, though the central government has made effort to alleviate the gap among different areas in terms of developing standards, provinces tend to give a priority to local profits rather than considering the integrated advancement of the whole country. Local protectionism exerts detrimental influences upon market expansion of Golden Bridge Company in nationwide and deters the establishment of a comprehensive distribution channel. Since the introduction of economic reforms in 1978, China has become one of the world's fastest-growing major economies. As of 2013, it is the world's second-largest economy by both nominal total GDP and purchasing power parity (PPP), and is also the world's largest exporter and importer of goods. China is a regional power within Asia and has been characterized as a potential superpower by a number of commentators. China allows foreign businesses to enter. However, the government has issued policies that ban console games and certain online games. The restrictions set by the government could be troublesome since Square Enix’s main product line are video games. This would require Square Enix to readjust their main products, which is unrealistic.

Economical Environment
China is valued as one of the most vibrant countries in terms of economic development among the world. The reform & opening up in 1978 accelerated China’s GDP growth from 362.4 billion RMB to 30 trillion RMB within a 30-year period. Moreover, in 2010, China has been the second largest economy instead of Japan whilst the value of export accounted for 10% of world. Based on these statistics, judgment can be made that manufactures in China including flooring industry may keep an optimistic attitude to their future prospects in some extent. Nonetheless, Chinese economy may suffer...
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