International Expansion - Entry into China - Essay Example

Star Clothing is a proposed British supermarket chain that will be retailing food, clothing, and other fast-moving consumer goods. To enter any market, it is critically important that the firm takes into consideration different aspects. These aspects include a critical assessment of external factors such as economy, political environment, and social trends which can help an organization to practically evaluate how it can use its strengths and expertise to overcome challenges in order to make a successful entry (Child, 2005).

Entry into China
Political Factors

 China is a socialist country with a government that controls everything in the country. The overall involvement of the government in the affairs of firms is relatively higher as new and international firms have to obtain government permissions and follow strict rules to do business in China. ( Jiaxing, 2011 )
Economic Factors

China is the leading economy in the world and has surpassed Japan as the second-largest economy, too. With the huge population, size, and increasing level of personal income, China’s economy provides a perfect market opportunity for any global firm.
Social Factors

Further, the overall managerial practices and the methods of socializing in China are different from doing the same in the UK. Star, therefore, will have to face serious management challenges to ensure effective customer services as well as employee management (Adler and Gundersen, 2008)
Technological factors

Improvement in information technology and the presence of leading courier services in the market have relatively made it easier for international firms to start home delivery services in China. Star can actually take benefit of these trends and develop an online portal through which it can actually offer free home delivery services and tap into a growing market that is open to use technology for the purpose of shopping (“Consumer Spending in China”, 2012). 
Legal Factors

As discussed above, China is a communist country; therefore, the legal environment is relatively more complex. Though China has become more open to international companies, rules and regulations are still complicated. Global firms have to follow a strict legal framework in order to work in China. Compliance with regulations can actually increase operational costs and lower the competitive ability of any firm.

Environmental Factors

Star generally will open its stores on relatively large land spaces and, therefore, can create environmental risks for the local area. The consumption of large tracts of land for commercial purposes can actually increase the environmental damage. Star may also face increasing pressure from the Chinese government to comply with its strict environmental protection laws.