Pest China Essay

1476 words - 6 pages

The PESTLE Analysis is a common approach for examining the general business environment in order to manage the future opportunities and threats from probable changes in the environment (Mullins 2002) by analyzing the Political and legal conditions, Economic conditions, social and cultural conditions, technological conditions and environment related issues. In the following we will execute a PESTLE Analysis on the E-Commerce sector of the Chinese market. And as proposed by Neil Botten (2008, p.39) that there are no pure factors because these factors are interlinked.

Political and legal analysis 
Political factors include government regulations and legal issues and define both formal and ...view middle of the document...

270). But the legal system of China does develop quickly to meet the needs of the e-commerce.
 Economic analysis
Any development in the economic part of a country’s environment could have significant impacts on the SMEs and their activities. These factors include the total GNP trend, GDP per head, inflation rate, exchange rate, energy and raw materials availability and cost, employment level, interest rate, monetary and fiscal policies, banking policies an investment and so on (Analoui & Karami 2003, p.75).
Figure 2 Growth of China GDP per capita in the new century
Source: The World Bank Group 2011
Above is the growth trend of the GDP per capita of China in the new century, similar to the indicator GDP, the country has sustained a continual rapid growth in term of GDP per person, indicating that each people is creating more and more values to the society resulting in the increase of the individual consumers’ purchasing power. Though the economic situation is seems to be good, the economic development does slow down a little and also with worrying trends such as high inflation rate and high property prices. According to the most recent news, the consumer price index rose 6.1 per cent from a year earlier in September, down from a three-year high of 6.5 per cent in July. Politically sensitive food prices, however, increased by more than 13 per cent. The overall economy has now slowed for three consecutive quarters – largely the result of BeiJing’s efforts to cool growth and dampen inflation. The central bank of China, the People’s Bank of China, has increased interest rates five times over the past year and increased the reserve requirement for commercial banks for nine times, and at the same time also asking banks to reduce lending and imposing limits on home purchases to curb property and consumer prices (Anderlini 2011).
 
  Social and cultural analysis 
To understand the social and cultural environment involves close analysis of the society. Demographic changes such as population growth, movements and age distribution will be important, as will changes in cultural values and social trends such as family size and social behaviors (Dransfield 2005, p.60). Such factors could include:
Consumer lifestylesEnvironmental issuesDemographic issuesEducationImmigration/EmigrationReligion 
With the rapid economic growth, there are growing people having Internet access and use the Internet to do shopping. Many people have called themselves the Taobaoer by spending much of their monthly expenditure on Taobao, the largest B2C e-commerce website. In 2010, China’s online shopping industry had a turnover of $80bn, and grew 87% year-on-year. China’s 420 million Internet users spend around a billion hours each day online and last year, 185 million made at least one online purchase. According to Boston Consulting Group, the volume is expected to increase fourfold by 2015. And E-commerce has already been changing the way Chinese consumers think about...

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