Economic Assignment

Economic Assignment

Introduction

According to Chu (2010) recently China has emerged as the fastest growing economy in the world alongside India and Brazil. China has been the centre of attraction for many multinational companies operating in the world. Along with providing several sources of attraction for investment and business opportunities there are many challenges faced by companies while operating in the Chinese Economy like cultural, political and historical challenges. The dynamic business environment provides companies stability and prosperity in the future. Before entering the Chinese economy the company will need to develop a detail market research and finding out the factors that need to be considered while entering in China. The economic analysis will help PAG Ltd. to understand the features of the Chinese economy so that the company can develop strategies in order to overcome the challenges and avail the opportunities in the economy so that PAG Ltd. can strengthen its business in the whole world.

Discussion

Recently all the economies of the world got affected by the recession but according to a survey 77 percent of the companies voted for China among the top three economies in order to either invest or run their businesses in the Chinese economy. The diversification and the competition in the Chinese economy has made it challenging for the companies to set their businesses in China and become successful because China has a huge market as it has one of the largest population of the world. According to Zarathustra (2012) the GDP of China is recorded at a growing percentage of 7.4% and the final consumption rate is 55%. The Chinese economy is favourable for the consumable products and recently there has been a decline in other sectors of the economy but as China as a huge population to feed therefore it always encourage consumable products so that competition can increase and the best product is provided to the customers. It is time for Christmas in the whole world and the demand for consumers are encouraging so the greater the number of companies the more the orders will be completed of the people. China is ranked 138th among the freest economies of the world and government encourage businesses coming in China instead of making their domestic market strong and competitive. As there are many multinationals operating in China the PAG Ltd. will face a strong competition. The mode of entry into the economy will be through exports and then establishing a subsidiary in China.

The recently changing demographics of Chinese economy in terms of increase in the income of the consumers, which has resulted in increasing spending of the consumers and the opening of the business environment has become the major reasons for the western companies to start their businesses in different sectors of the economy. In order to enter the Chinese market a lot of experience and knowledge about the business environment is necessary. According to Hedley the first thing Companies like PAG Ltd. need to find is the identification of the market outlook which shows ...