Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
BUSS4 Pre-release case study 1.The extent to which China creates opportunities and threats for businesses 2. The risks and rewards involved in trading with or operating in China 3. The factors affecting the success or failure of businesses trading with or operating in China 4. The relative advantages and disadvantages of the ways in which businesses might operate in the Chinese market (eg exporting, joint ventures, mergers or setting up production or sales outlets) 5. The ethical and environmental issues involved in trading with or operating in China 6. How business strategy might be affected by developments in China. 1.35 billion people Former command economy Rapidly growing population 1 child policy 1986 open door policy to international business, which meant private business ownership and foreign investment WTO 2001 Olympics 2008 http://www.bbc.co.uk/news/blogs-newsfrom-elsewhere-24301960 http://www.bbc.co.uk/news/business24121739 http://www.bbc.co.uk/news/business24012224 A growing market, much faster than the UK 7.8% compared to the UK less 2% Inequalities – People who live in the towns far more affluent than those in rural areas 100m people that are millionaires compared to 0 25 years ago (butler school) Growing luxury goods market (Rolls Royce) UK exports £1 billion 300 million ‘middle class citizens more than US Potential for outsourcing – Much cheaper labour costs in china mean companies like (http://www.caldeira.com/) can save a lot of money by outsourcing production. Increasingly however the emerging markets are also being used for technology jobs like call centres and IT support, (118 118) Potential for outsourcing – Much cheaper labour costs in china mean companies like (http://www.caldeira.com/) can save a lot of money by outsourcing production. Increasingly however the emerging markets are also being used for technology jobs like call centres and IT support, (118 118) Sources of funds – Many Chinese companies are keen to invest in UK businesses e.g. Sunseeker (Dailan Wanda). They spent £300 million on the British firm despite the business being loss making. Now coming out of recession this investment looks sound for both parties and saved Sunseeker UK This could also be a threat as some UK businesses may see their share price fall in difficult times and be liable to a takeover! http://www.independent.co.uk/news/busines s/sme/is-china-a-threat-to-britains-smallbusinesses-475709.html http://www.bbc.co.uk/news/business24238200 http://www.bbc.co.uk/news/business24280262 An uncertain partner – The world bank rates China as the 91st easiest country to do business with. USA (4th) This is because of corruption and bureaucracy. Less rigorous laws in relation to copyright, patents and trademarks. As per car copies Larger Chinese businesses have links to the government and they will always protect their own businesses first Huge potential for growth – Annual growth in the economy by 10%+ until economic slowdown, now 7.5% -8%. Compared to UK’s of 0-1.5%. This can be a risk for UK businesses as the Chinese businesses can always undercut them Chinese market running out of steam? – Despite the published figures of growth they do not tell the whole story and they may be exaggerated to fool their trade partners. (how china fooled the world) China's economic growth (source: World Bank) Chinese people save 35% of their earnings and their real disposable income is not very high as food and property inflation is much higher than wage inflation. Basically the Chinese people don’t want to spend their money An empty section in the New South China Mall Political instability – China is not a democracy. People cannot vote for the government and therefore are subject to rules that can change at any time. Freedom of speech e.g. Facebook & Google have restrictions on what they broadcast Understanding the market and culture Relationship based v transaction based Face to face business dealings Negotiate and haggle Entertain e.g. Take client out to dinner Perception of deal Polite meetings and multiple meetings Gifting Hofstede dimensions of national culture (see resource sheet 4) Hofstede dimensions of national culture (see resource sheet 4) Power distance Individualisation v collectivism Masculinity v femininity (yin and yang) Uncertainty avoidance (Chinese are more risk adverse see savings) Long term v short term STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Cheap labour Growing economy Increased transportation costs Risk of local copies Exporting – As discussed (in culture) this in not a guarantee of success. Red means danger in UK and wealth in China! But there is a growing demand for Western luxury products e.g. Rolls Royce and Sunseeker This incurs a cost in regard to duties, exchange rates, tarfiffs Any fluctuations could mean a change in the demand! Transport charges Government laws Joint ventures – Tesco joining with Chinese Resources Enterprise (CRE) Must choose the right partner Safeguarding IPR Must respond to change Preparing for break up – As above but if regulations change, this may mean the joint venture no longer can work Mergers and takeovers Setting up production (outsourcing) Sales outlets Exporting – As discussed (in culture) this in not a guarantee of success. Red means danger in UK and wealth in China! But there is a growing demand for Western luxury products e.g. Rolls Royce and Sunseeker Joint ventures Mergers and takeovers Setting up production (outsourcing) Sales outlets Chinese government favouring Chinese businesses in regard to taxes and even manipulating exchange rates to make goods seem cheaper to importers Tesco in China http://news.bbc.co.uk/1/hi/business/3893469.stm Links to 1, 2, 4, 5 http://zigzageducation.co.uk/downloads/Bus iness/buss4/5258websites.html