Characteristics and Performance of the Chinese Export Market - Statistics Project Example

Running head: Chinese Export Market Chinese Export Market Name Institution Instructor Date China is a country that is known to be highly populated. As such, the country has to come up with ways of sustaining its large population as well as its large economy. Exports are one of the major ways that the Chinese government assists its citizens to develop in business. The China export industry boasts of exporting almost all industrially manufactured products to Africa and a large part of Asia. This export trade started along time ago with China exporting some of their goods that included metal ware and jewelry. With improvement in the export trade, the Chinese business analysts set up a plan that sought to make China the world’s largest exporter. These analysts undertook a study to identify the products that were needed by the external market and then they undertook the process of producing these products in large quantity. (James Agarwal, 1990) In addition to producing products, the Chinese citizens also sought more educational knowledge so that they could understand the market trends and formulate functional export business systems. Over the years, China ranks among major world economies due to the strength of its export market. In addition to having a stable export system, China has gone a step further and developed a good business relationship with many third world countries. This development helps the country’s businesspersons to get more demand for their products in the foreign market. The history of China’s success in business dates back to the 70s when China was getting business development loans from Japan. It is at this time that China started encouraging its citizens to venture in enterprise businesses. (Kaufman-Scarborough, 2006) This was a follow-up of the movement that Mao Zedong had started that sought to give China a great leap forward. The Chinese people worked hand in hand with the government getting subsidies and investing in highly profitable businesses and in the late 80s, China’s export industry had already started booming. They were supplying a large part of Asia as well as a considerable part of the other continents. With the major competition being America and Britain, China had to work out a plan to beat the competition and ensure that their goods bore the same quality as the goods that competitor’s countries produced. The Chinese first decided to lower the prices and to produce their products in large quantities the Central bank of China supported companies that showed ability to produce reasonable support for the country to beat its competitors. It is in the 90s that the Chinese products started triumphing over the Britain and European products. The Chinese ensured that their products flowed constant and the prices were consumer friendly and in this way, they managed to rank among some of the greatest exporters in the world. (Wang, 200) An analysis on the Chinese export industry in the past 10 years shows an impressive trend as shown in the graphs below. The first graph shows the trend of exports between Chine and the rest of the world while the second shows the export trend between China and the United States. Statistics   2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Exports 249.2 266.1 325.6 438.2 593.3 762.0 969.0 1,220.5 1,430.7 1,201.7 % change 27.8 6.8 22.4 34.6 35.4 28.4 27.2 26.0 17.3 -16.0 The horizontal axis shows the years while the vertical axis shows the total amounts exported in billion dollars. The graph above shows the export trends between China and the rest of the world from year 2000 to 2009. It shows that there has been a steady increase in the amounts exported. The growth of exports has been exponential up to 2008 when the recession influenced the amounts. This is a clear indicator that China has developed proper export business models that will see it perform even better in years to come. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 US exports 16.3 19.2 22.1 28.4 34.7 41.8 55.2 65.2 71.5 69.6 % change 24.4 18.3 15.1 28.5 22.2 20.6 32.1 18.1 9.5 -2.6 The Vertical axis represents the amount in billion dollars that were exported to the US from Chine. The horizontal axis represents the years of export. The following features characterize the Chinese Export Market; Boosted by a socialist Economy – China has been known to be a social state working on the principles of Mao Zedong. This is a great pillar in the strength of the export industry. The main advantage of a socialist economy is the fact that all the people are united towards achieving a common goal. This prevents personal interests from hindering trade. Chinese businessmen are known to be very supportive and friendly and they go an extra mile to extend credit facilities and financial support within themselves. Through this way, they have managed to conquer some of the greatest capitalist economies that are run by a number of wealthy individuals. The socialist economy has enable China to get a high number of billionaires in the Forbes list. The socialist economy has also eliminated corruption which is a major hindrance towards doing business in the foreign market. (Wang, 2000) Wide Market – The Chinese are known to venture many countries and due to this reason, there is always a market for their goods. Business principles dictate that business can only be carried out when there are products ready to be sold and there is a willing buyer. Chinese people have understood this concept and they have gone a step further and become more aggressive with their marketing skills. They have involved various governments in many countries and they have won many supply tenders. (Jennifer A. Pope, 2006) Wide range of goods – China is known to export almost every household good. This ensures that their goods meet the needs of all people in a community setting. Some of the goods that are exported from china include building materials, house fixtures, computers and other electronics as well as clothing and technological devices like solar systems and energy saver gadgets. To ensure that their goods meet the standards and expectations of their market, the Chinese businessmen specialize on a certain line of production. For instance, a business that produces footwear collects information about the footwear needs in the market then gets down to mass production of the footwear that is in demand in the market. Through specialization, Chinese businessmen have managed to withstand economical disasters such as recession as well as poor demand and competition. (Jennifer A. Pope, 2006) Fair pricing – The Chinese understand the principles of economies of scale. They focus on mass production of products and they ensure that they save as much as possible on production costs. They also understand the profitability modules and they prefer making more profit on more sales instead of making a one-off profit on limited sales. They understand that a constant demand will ensure that their businesses are perpetual and so they prefer making little profit from a continuous flow of their products. This has made most of the Chinese products to sell at a low price. The low prices have enables the Chinese businessmen to sell many units and through this tactic, they have managed to beat the competition that has been there in the export industry. (Jennifer A. Pope, 2006) China is a low cost producer – It is evident from both tables that Chine has managed to take the world export market by storm. Exporting an average of 50 billion dollars a year to the United States is an indicator that the Chinese are able to sustain the entire world with their products. For such a phenomenon, the production must be largely attributed to availability of labor and resources that are essential in the production of volumes. (Jennifer A. Pope, 2006) The following are a number of strengths that boost the China Export industry: Stable Government – The current Chinese government is determined to ensure that China cements its footing in the council of the world’s greatest economies. The Current Chinese president Mr. Hu Jintao has focused his attention to third world countries in Africa and Asia. He realizes that these are the countries that are still developing and they need many goods from china. The president has also sought the support of the major world economies by developing a good relationship with countries like the USA, Britain and European countries. This will enable Chine to export some of their goods to these countries. (Kaufman-Scarborough, 2006) Availability of Labor – While many countries in the export market apply a capital intensive approach to the market, Chine has decided to approach the export market with a labor intensive tactic. The country has realized that it is from the availability of cheap labor that it manages to produce a GDP of $5.365 trillion. With the cheap labor, Chine has managed to get into mass production of goods that are on high demand in the export industry without investing huge sums of money into large machinery. While some of the labor is busy producing products, the rest of the labor is busy studying and researching on better ways of production and improving efficiency. These are the people who have developed machines that are moiré efficient than those that are produced in the European market and these machines have enabled the Chinese companies to produce more goods for the insatiable market. (Kaufman-Scarborough, 2006) Government subsidies and less taxation – Since China is a social state, most of the business that it conducts within its boundaries is meant to boost and brace itself businessmen for a wider market in the export industry. The government gives its businessmen incentives by giving them subsidies on fast moving goods and waiving tax on exports. The customs also waive their duties on exports of some goods and this ensures that most of the Chinese goods reach the export market at very low prices and this keeps off competition. (Peter G.P. Walters, 2000) Good International relations- China has been known to be in the good books of may trade organizations like the World Trade Organization. This has enabled the country to get consideration for most of its export business since the WTO aims at promoting emerging exporters into greatness. With such a great relationship, China has been known to enjoy doing export business under the shade of the WTO support. The WTO has always supported its export business models and it has always been there to help China to develop a great business relationship with other nations. (Peter G.P. Walters, 2000) There are a number of products that have boosted the Chinese market. These are mainly electronics and technological devices. At this time when the entire world is directing its resources towards technological development. Chine has taken advantage and developed many electronics that help towards achieving digitization of the entire world within the shortest time possible. Some of the products that Chine produces in volumes include cheap phones, television sets, data storage equipments, computers, motor vehicles and computerized company machinery. Most of the countries in the world see China as a role model and the hub of all technology. This has seen governments in many countries in Africa seeking collaborations with the Chinese government for development in their respective countries. This move creates a wider market for the Chinese to export their products. This has enabled many businessmen in China to survive business storms like inflation since they have a stable customer base in places that were not hit by the recession. (Peter G.P. Walters, 2000) Analysis of year 2009 It is only in this year that both graphs show a decline the amounts that were exported from China. This is mainly because the recession hit largely across Asia. This affected the Asian currency as well as other major currencies. However, China was able to sustain its economy even in the waking of the recession unlike many capitalist economies like the United States and many European countries. This is an indicator that China is a world export Giant since it still moved volumes in the export industry even when other world exporters were collapsing under the pressure of inflation in their countries. Future Movements and Developments in International Trade With the Graphs above showing the trend in the past 10 years, China has indicated that it is set to become a contender for the world superpower position. In another 10 years, China will be controlling the world’s exports as a monopoly. It has already outdone most of the world exporters like the United States and European countries. With its huge labor potential and this is an indicator that China can still manage to export its good to the entire world without exhausting its resources. China is strategically located next to the world’s largest producers of oil and this is an advantage since it managed to get its fuel at lower costs than most of the world exporters. This is an advantage to the Chinese companies since they can always produce export products without worrying about the escalating energy costs. China is also developed in both infrastructure and skilled labor. This makes it independent and it can sustain its own mass production system without relying on external support. With such indicators, China is likely to be a monopoly in the world export market within the next 15 years if the current tend goes on. Conclusion China has been enjoying an improving trend on its volume of exports. This shows that the United States as well as the rest of the market has a high demand for the Chinese products. China prides itself in producing large volumes at a cheaper cost and this is the reason why the Chinese products are more appealing that those of the other exporters. With this in mind, China is set to grow in the export industry since it still has great potential in its labor and material resource. (Wang, 200) Bibliography James Agarwal, T. W. (1990). China's entry to WTO: global marketing issues, impact, and implications for China. International Marketing Review , 279-300. Jennifer A. Pope, J. A. (2006). Developing advertising for the new Chinese consumer markets. Journal for International Business and Entrepreneurship Development , 94-100. Kaufman-Scarborough, C. (2006). Asian-American consumers as a unique market segment: fact or fallacy? Journal of Consumer Marketing , 249 - 262. Peter G.P. Walters, M. Z. (2000). International marketing in Chinese Enterprises. Some evidence from PRC. Management International Review , 265-279. Wang, Z. (200). The Impact of China’s WTO Entry on the World Labour-intensive Export Market: A Recursive Dynamic CGE Analysis. . The World Economy , 379-405. Read More