Business Environment Essay

4213 words - 17 pages

China and India are two of the emerging markets with the highest potential in the world. Waitrose positioned as a high-end supermarket, which both countries have large business potentials with their rapid growing high-purchasing power population. However, it is crucial to fully understand both markets’ political backgrounds, economic performances and social-cultural contexts before investing in those markets. The following report will analyze the fundamental factors for the British company to consider that is crucial to the final decision.

Cultural indifferences between China and UK raise risks in daily operations and management. The huge differences for long-term ...view middle of the document...

In 2014, 63.7% of the total revenue of JLP was generated from Waitrose division, and its online trade grew by 41.4% alone (John Lewis Partnership plc, 2015).
1.2 Methodology

1.3 Abbreviations

2.1 Political Environment
2.1.1 Political system and the impact
The mainland of China is a communist, and has centralized controls exercised by the Chinese Communist Party. This one-party system is proved to be valid for such a huge, complex and diversified country. Han (2003) pointed out that social stability is closely connected to political factors, and it is crucial for the business development. Practically, the political system turns out to be relatively advantageous. The Gini coefficient sustained a downward trend since 2009; employment rate increased in consecutive years; crime rate is much lower than the UK; and the PMI of service industry is around 52(trade economics). These series of indexes are best evidences which show a positive political environment for social stability and development.

2.1.2 Corruptions and government efficiency
In 2013, Based on Transparency International's CPI*, China was ranked 80/177, whereas the UK was ranked as 14/177(Trade economics). President Xi proposed the strictest anti-corruption policies after taking office in year 2013. The grade of government efficiency also raised from 3.95 in 2012 to 4.1 in 2015, whereas that of UK is around 4.6(World Economic Forum,2015). The new generation of administration and renovated official circumstances will offer foreign enterprises a more efficient and easier operation.

2.1.3 Related policy
Now, the Chinese government’s strategy had shifted from a manufacturing and export-driven to a service-based and consumer-led economy, which provides bright potentials for retailing market. The latest policies implied the loosest regulations for foreign investments, especially for service industry(NDRC&MC, 2015). It aims to ease investment boundaries for foreign investors to fasten speed for opening up service market to outsiders. In addition, China greatly welcomes foreign retailers. More importantly, there are many stimuli to encourage foreign retailers’ entrance. For example, tax priority, free shares of distribution and online sales.

2.1.4 Diplomatic relationships
To date, it has been 11 years since China and UK strategic partnership founded. Both countries have achieved great mutual benefits through their positive relationship. Frequent interactions between these two countries this year demonstrate a better future of the relationship. After Europe Economics Crisis, linking UK companies to the enormous Chinese market has became one of the significant strategies to recovery its economy. (Cameron, 2013). UK have conducted priority policies to attract Chinese investment and tourists. China also shows a proactive and welcoming attitude to support UK companies’ entrance.
2.2 Economic Environment
2.2.1 Economic growth
China had exceeded United...

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