Pestle Analysis of China

PESTLE Analysis of China

Political:

China set to focus on supporting domestic brands and creating more appeal for domestic brands, this will mean naturally less support for exports and overseas brands

Single child policy means that consumers aged between 18 and 30 are likely to have savings from past generations passed down to them

Economical:

China has had the highest average yearly economic growth rate between 1980 and 2004 of 9.8%

In 2011 unit prices increased as a result of increased raw material and labour costs

During the global recession of 2008 and 2009, China recorded GDP growth of 9.6% and 9.2% respectively

According to the Chinese central government GDP growth in 2012 is expected to slow 7.5%.

Due to the strong confidence in China’s long term economic prospects, foreign direct investment in retailing continues to increase in China. By the end of August 2009, the total number of foreign investment companies reached 2,400, and the total investment capital in China surpassed US$4.8 billion.

Social:

Shopping has become a leisure pursuit for many middle class and affluent Chinese consumers. In particular multi-format retail Centre are very popular.

Purpose built retail parks and mega malls are being set up by the government to encourage consumers to spend as they begin to see shopping as a leisure pursuit

A number of public holidays and festivals provide great opportunities for gift giving

Technological:

Sina Micro-blogging site is widely considered as one of the biggest online marketing platforms in China and is reportedly a bigger phenomenon than Twitter in the US

China has the highest number of internet users globally at 454 million

Taobao a multi-branded online shopping mall accounts for 80% of China’s total e-commerce trade

Legal

Retail outlets in urban areas of China normally open from 09.00 till 18.00, trading 7 days a week and 365 days a year including public holidays as they are considered to be peak trading times

China has a number mandatory laws regarding foreign business entering the country although access was made complex in 2004 when China gained full membership to the World Trade Organization

Ethical/Environmental

China is infamous for its piracy and counterfeit markets fueled directly by the consumer who expect businesses to have high ethical standards yet will purchase counterfeit product to save money, the government are looking to tackle this with continued investment in consumer education

The Chinese don’t understand the idea of plagiarism as they are taught from a young age to copy ‘old masters’, therefore if something is done well there is no issue with copying hence the issue with counterfeit product