PEST Analysis of China
China is among the most attractive locations in the world. It has alsogrown to become one of the strongest powers. This rise boosted international business. The legal system too has been improved. Foreign investors seek business in China mainly because of 3 things. They are:
• Size of the market
• The very low cost of labor
• China’s growth potential together
POLITICAL FACTORS
Political factors which impact China are:
• Government regulations
Both formal and informal rules, which firms must abide by, impact the country. Many people claim that the political force is the most unsettled force. Over the past few years, the government focused on the development of e-commerce.
• Legal issues
The legal framework for e-commerce is still in its early stage. China has little experience for drafting e-commerce legislation for topics like intellectual property rights protection and tax. There aren’t any regulations supporting the privacy, recognition of digital signatures, consumer rights and validation of electronic contracts yet.
ECONOMIC FACTORS
Over the past five years, China’s economy experienced significant GDP growth rate. Reports suggest that if China continues to excel at this rate, it will surpass US GDP soon. Some factors which might help are:
• Sigh rate of savings
• Abundant and skilled labor
• More export business
• Potential urban growth
Any economic development could have a major impact on the SMEs and their actions. China’s GDP rate suggests that each citizen is adding more and more values to the society. This is in turn increasing consumers’ purchasing power. The labor cost in China is extremely low. This is why leading companies like Apple are inclined to hire workers from the country.
The growth rate is impressive, but it can slow down. Some of the worrying trends in China are: