PEST Analysis(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.
Consumers aged between 18 and 30 are likely to have
savings from past generations passed down to them.
Chinese law makes a distinction between the corruption
of officials and business corruption. Officials are defined
as those who perform official duties in state-owned
enterprises. Legal liability depends on the size of the
bribe, to whom it is given and the intention to obtain an
improper benefit. Chinese prosecution standards provide
guidance on bribery thresholds for the corruption of
officials such as:
o

a payment of more than RMB10,000 (US$1,200) to a

government official

http://www.

goodcorporation.com/uncategorized/corruption-in-china-the-challenges-and-the-tools-to-tackle-them/

Economic
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 labor 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 Chinas 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.

http://www.studymode.com/essays/Pestle-Analysis-Of-China-38876242.html

Social:
he current population of the Peoples Republic of China is
estimated to be approximately 1.360.72 million people,
which is an increase of about 0.01% from the last record
of the population.
Shopping has become a leisure pursuit for many middle
class and affluent Chinese consumers. In particular multiformat 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.

http://www.worldpopulationstatistics.com/china-population-2013/

Technological:
China has the highest number of internet users globally
at 454 million.
Poor materials can cause problems of low infrastructures
quality. Infrastructure in China has put people in danger
time and time again. In August, a $300 million suspension
bridge collapsed, killing three people; in 2009, a building
in Shanghai toppled because its foundation was subpar;
and the Telegraph reported the $210 million Guangzhou
opera house began to shed its glass window panels and

large cracks formed in the ceiling just months

after opening.

http://www.studymode.com/essays/Pestle-Analysis-Of-China-38876242.html
http://www.worldpopulationstatistics.com/china-population-2013/

Industry (5 Forces) Analysis( China)

Porters 5 force
THREAT OF NEW ENTRANCE (high)
The threat of new competitors is high in food retailing
business in China due to the fact that the amount of
initial investment required in order to start the business is
fairly affordable compared to many other types of
businesses, and the necessary technology is obtainable.

Alcoholic business is growing fast which will attract new

competitor and industry barriers are low
BARGAINING POWER OF BUYERS (high)
Customers are sensitive about price because there are
some competitors with similar products in the market.
Buyers have their own royal company.
BARGAINING POWER OF SUPPLIERS (low)
Suppliers generally have relatively low bargaining power
in the food retailing industry as there are a large number
of existent suppliers. The suppliers are unable to mark up
their products significantly as most of the customers
usually purchase in huge quantity. Moreover, due to the
fact that durian quality for chips and snack do not differ
largely in quality across suppliers, this further restrains
the bargaining power of the suppliers.
THREAT OF SUBSTITUTE PRODUCTS (high)
There are some established substitute products in the
market. Buyers have little switching costs to substitute
another product. And the relative prices of substitute are
competitive as well.
RIVALRY AMONG COMPETITORS (high)
Competitor provide similar product offering at high
competitive prices. It is observe that neighborhood durian
chips sell it products at a significantly cheaper price.
Diverse competitors which rely on product variety to
attract customers, also local prefference taste.

http://www.scribd.com/doc/3699043/BreadTalkFinalReport
Opportunity
The population of cheap Chinese labor is set to shrink,
while the Chinese economies continues it's rapid growth.
As demand increases while supply shrinks, this population
will see pay raises. Over the last two decades, Chinese

consumption as a share of incomes has fallen. This trend

will reverse, and as it does, the demand from Chinese
consumers will explode. An increase in consumption will
increase domestic Chinese earnings and help to balance
world trade.
Threats
"The world's most populous nation, which has built its
economic strength on seemingly endless supplies of
cheap labor, China may soon face manpower shortages.
An aging population also poses difficult political issues for
the Communist government. The One-Child policy has
spared the country an estimated 390 million births, but
may ultimately lead to a stark imbalance between young
and old. With China's breathtaking rise toward affluence,
most people live longer and have fewer children,
mirroring trends seen around the world. Those trends and
the extraordinarily low birth rate have combined to create
imbalances in the workforce. As workers become scarcer
and more expensive in the increasingly affluent cities
along China's eastern seaboard, the country will face
growing economic pressures to move out of assembly
work and other labor-intensive manufacturing, which will
be taken up by poorer economies in Asia and beyond, and
into service and information-based industries."
http://www.wikiwealth.com/swot-analysis:china