Country Analysis Report - Research Paper Example

Lecturer: Also known as The Peoples Republic of China (PRC), China is a sovereign Asian located in the FarEast of Asia. It borders 15 countries in total on all of its sides except to the sea and has two regional borders namely, Hong Kong and Macau. According to the USA Central Intelligence Agency cite, China stood as a leading civilization hub for centuries not until in the 19th century and the early 20th century when it was engulfed in political turmoil’s that contributed to civil unrests, major famines, military defeat and foreign occupations first by the British followed by the Japanese. Even though China is a racially mixed country, it has nineteen native ethnic groups in addition to the foreigners it host as immigrants and political asylum seekers. The official and standard language spoken and used in china is Mandarin. Wikipedia notes that China is probably the fourth largest country in the world by total area and defiantly the second largest in the world by land area after Russia. Over the years Beijing has been the most popular tourist destination in China, this is according to an article on top tourist destinations in China by Kelly. Other major interesting places in China are The Terracotta Army in the province of Xi`an, panda breeding in the province of Chengdu, the scenic Zhangjiajie, the plateau of Tibet, the yellow mountains of Huangshen, the idyllic limestone scenery of Guilin, the cities of Hong Kong ,Shanghai, Suzhou and Hangzhou which one can all visit by use of the bullet train. Due to the varied ethnic groups China is probably home to major events, these events include, the lantern festival celebrated on the 15th day of the first Chinese Lunar Month, the Baiyun Temple Fair which is usually celebrated in the city of Beijing from the 19th of February to the 9th of March of every year at least according to Annie Wu in her article Baiyun Temple Fair in the internet site China Highlights and the Five Gods of Wealth Temple Fair also celebrated in the city of Beijing from the 20th of February to the 6th of March every year. Since my business is that of Tourism and travel Management which involves the detailed organizing and booking of tour trips for my customers I choose China due to its diverse culture. The diverse culture in China will be very profitable to my business in that, my customers will have a varied number of choices to make from the tour packages that my business will be able to provide. These tour packages will include all the festival events in China, the beautiful geographical scenes in china and the opportunity to have the time to travel and shop in China. Georgine K. Fogel in his paper, Business Environment in China, describes China as an emerging economy that offers lot of market opportunities for foreign investment. He further says that China has a huge potential for economic growth offering access to a large market and considerable savings in labour costs, though he notes that caution must be used due to differences in the political and cultural environment that create risk and pose uncertainty for foreign investors. China according to Wikipedia is one of the very few remaining socialist states that have openly endorsed communism, though the government has been severally described as authoritative limiting the freedom of speech, expression, and media amongst others. China has a decentralized political system, a system that provides the provincial and sub-provincial leaders with significant amount of autonomy. The Marxism ideology followed in China provides a rather conducive political environment for the growth of foreign direct investment (FDI) entities in China. Since this has proved to be very reliable, the only possible political risks in China that can affect my business and any other form of FDI is the discord of political treaties and ideas that have been brought together by China and the Western countries especially USA. The current political stability in The Peoples Republic of China provides me with very favourable conditions to set up my business. China has been a member of WTO since 11 December 2001, according to the WTO website which makes it a favourable place to set trade in. This has further catapulted it to a major economic giant both in the Far East and all over the world. It is also a member of the Free Trade Agreement (FTA) between the Association of South East Asian Nations (ASEAN) and herself. John Roberts suggests that FTA is the world`s third largest free trade bloc after the European Union (EU) and the North American Free Trade Association (NAFTA).The members of ASEAN are China,Indonesia,Philippines,Thailand,Singapore,Malaysia,Brunie,Vietnam,Laos,Cambodia and Burma. China is also a member of APEC, the Asian Pacific Economic Cooperation which not only includes the ASEAN nations but all Pacific Rim countries. China is a socialist state and they practice communism which means it has more of a mixed economic system which majorly banks on communism as its pillars. The World Bank estimated that China`s Gross Domestic Product (GDP) expanded by 7 percent in the first quarter of 2015 and its annual growth rate averaged 9.06 percent from the late 1980`s to date, with an all time high of 14.20 percent in the fourth quarter of 1992 .This data is as provided by the Trading Economics .The IMF (International Monetary Finance) further projects that the GDP of China will grow at a rate of 6.8 percent for the rest of 2015. The statistics agency of China puts the level of unemployment in the country at a low of 5.1 percent according to a report by Pete Sweeney in Reuters. The levels of inflation in China have been generally low over the periods but the aftermath of the 2008 Financial Crisis had a great toll on the countries economy. This lead to quick measures that were taken by the government to cushion the Chinese Yuan or as it is commonly known, Renminbi. Although the measures taken were sustainable in the long run, it saddled the local governments into huge debts. Currently the exchange rate of the US dollar to the Chinese Yuan stands at 6.1982 according to Bloomberg Business which makes it very strong currency. In fact it is one of the major trade currencies in the world. In his paper The Most Important Chinese Trade Barriers, Derek Scissors found out that China is amongst the worst countries with respect to infringing intellectual property. He details that Beijing has the world`s most extensive system of subsidies which significantly blocs foreign access to the Chinese market. The Harvard Law School Library describes Chinese legal system as a socialist system of law which is primarily based on the Civil Law model. The tourism laws in China which form part of the PRC constitution are very favourable to my business in that it provides me with the necessary legal structures to apply, obtain a licence or permit of operation of a tour firm and to fully transact any tourism related businesses as long as I act within the law. Even though some of the laws are oppressive in nature, they still ensure a better business environment in the tourism sector. The laws provide that any disrespect of the social cultural activities of the Chinese will result to deportation, imprisonment or fine. But existence of the diverse and rich culture in China is a definite tourist’s attraction apart from the scenic topography thus my tourism firm will benefit a great deal. The dominant religion in China is Buddhism despite its multi religious population hence the need for respect of religious tourists attraction sites. Availability of modern public amenities and better infrastructure will ensure that my customers are well taken care of and comfortable at all times. This will be as a result of better living conditions and quick mode of transport that will be provided by the bullet train. Chinas tourism industry is one of the fastest-growing industries in the national economy and is also one of the industries with a very distinct global competitive edge. The total revenue of Chinas tourism industry reached USD 67.3 billion in 2002, accounting for 5.44% of the GDP at least according to a Research and Markets brochure prepared by the Guinness Centre. In its report on Travel and Tourism in China, Euro monitor International notes that the global economic downturn and tense relations between China and its neighbouring countries has to a greater extent hindered the healthy growth of inbound tourism. It is further noted that the development of travel retail sales in China have been severely affected by the decelerating domestic economy and anti-corruption policies placed by the central government. Based on my research, a setting up of a Tourism and Travel Agency in China is a lucrative venture hence I would set up a firm in China at my earliest convenience. This is due to the business friendly laws that govern the tourism sector in China and the conducive government regulations. The adoption of the Tourism Law of The People`s Republic of China on the 25th of April, 2013 as provided in the China National Tourism Administration website has levelled the business field in tourism. This has ensured drastic modernization of the tourism sector by means of advertisement and transaction of business making it readily available in the worldwide net. Promotion of the tourism by the central government has also opened up China to the general world making it one of the major tourist destinations in the world hence an influx in the numbers of both domestic and international tourists. China`s state of infrastructure is top notch in the world which means that there will be great hospitality centres for my customers catering for their diverse tastes and preferences within their budget. The availability of modern and quick means of transport will ensure that my customers are fully satisfied with the services provided by my firm on the basis of time management and ensure comfortabiliy. Although China is a communist and socialist state, the political stability is quite favourable for various business activities especially tourism. The political situation in China does not seem to change over a long period of time, thus its stability has made it a suitable place for Foreign Direct Investments. It is due to this factor that I have considered China as the most preferable country to expand my Tourism and Travel Management business. After obtaining of necessary business permits and licences, I will have to employ network marketing especially through the various social sites in the web. I believe that due to its technological advancement and capabilities, a good percentage of the Chinese citizens have proper access to internet. This will make my marketing strategy a whole lot easier especially during the national festival events when there is a huge number of inbound tourists as well as domestic tourists in China who form the bulk of tourists in the country. The best form of marketing strategy I would employ to ensure the expansion of my business into China is through setting up of joint ventures in collaboration with local existing companies or individuals. This will need me to conduct further feasibility studies to determine the type of companies and firms that will ensure maximum profitability in case of a joint venture. Some of the major advantages my business will gain from the formation of a joint venture with a local Chinese firm include; the sharing of risks and the ability to combine the local in-depth knowledge with my local partner who will have the know-how in regulations and processes required in the business. The availability of a ready investment partner will thus ensure that during the expansion of my business, there will be a credible and constant flow of capital as verified by Alan Gutterman in A short course in International Joint Venture. It will also ensure ready market access to my business since my partner will be able to easily access the local tourism market. Having a joint venture will help my firm significantly in that I will be able to avoid some of the trade barriers to foreign owned and foreign controlled companies. This will also give me an edge towards acquisition barriers hence making my firm very marketable and attractive to interested parties in the joint venture. To a greater extent I will have to expose my business expansion to certain risks such as loose of full management control, chances of irrecoverable investment capital if need be board conflicts and disagreements in the planning of the firms activities and unfavourable benefits workout in cases of profits as explained by Keegan W.J. in his book Global Marketing Management. In general, I would prefer to expand my business in China due the ready availability of market and the increased domestic consumption power. This in addition to the varied cultural events and natural scenic environment will provide my firm with the much needed marketing tools. Favourable FDI conditions in China are a key to my business expansion especially when it come to the most important role that has been played by the Chinese government to ensure that Special Economic Zones are formed to attract Foreign Direct Investments .Teshu Singh in her article, China: Reasons for Being a Top FDI Destination states the above mentioned reasons as the major contribution to the high level of increased FDI in China. References/Bibliography: 1. Teshu Singh, article, China: Reasons for Being a Top FDI Destination. 2. Alan Gutterman, A short course in International Joint Venture. 3. Keegan W.J, Global Marketing Management. 4. China National Tourism Administration website. 5. Research and Markets brochure, by the Guinness Centre. 6. Travel and Tourism in China, Euro monitor International. 7. The Harvard Law School Library, Chinese Legal System. 8. Pete Sweeney, Reuters, Growth of China`s GDP. 9. Bloomberg Business, Exchange rates of the US dollar to the Chinese Yuan. 10. Derek Scissors, the Most Important Chinese Trade Barriers. 11. Annie Wu, web article, Baiyun Temple Fair, China Highlights. 12. Georgine K. Fogel, Business Environment in China. 13. WTO website, www.wto.org/english/thewto_e/countries_e/china_e.htm 14. Central Intelligence Agency, USA. Read More