Impact of External Environment to Business in China Essay

IntroductionNowadays, china is experiencing a rapid stinting growth. By following the end of the eleventh National Peoples Congress of Peoples Republic of chinawargon recently, mainland China is emphasize to develop seven mod strategic industries with the release of the Twelfth Five-Year Program. As China is achieving a low carbon economy, thus 1 of the sweet strategic intentness, new efficacy is essential to the success of achieving the goal. Biomass energy is one of the new energy which generates electricity and biodiesel by burning awkward straw, fruit, woodwind and animals blow out (1). The following will be the analysis of Macro-environments for the China kindling and Power Company check to enter the China grocery store, and suggestions will be given at the end of the analysis.Company BackgroundChampway Technology Limited is the lonesome(prenominal) company who possesses an Environmental Permit to recycle waste formulation crude oil in Hong Kong. Its primary obj ective is to recycle all local anesthetic waste cooking oil and organic oil and grease into biodiesel. It render to save the environment by aiming at recycling all waste cooking oil in Hong Kong and stem the trend of re-using waste oil on the dinner table. It also committed to produce high tonicity biodiesel which is a clean and efficient fuel by using the serene waste oil (2).Macro-environmentAs China is a highly characteristic market, once foreign-invested enterprises want to enter the China market, thither moldiness be tighties to be faced. However, thither ar still some favorable factors firearm they are accounting entry such market, and they will be analyzed as follows.There are four macro-environments for Champway to enter the China market. Firstly, the Champway may eudaemonia from the political and legal environment of China. During the release of the seven new strategic industries in the Twelfth Five-Year Program, the substitution government has put so overmuch e mphasis on the development of new energy, especially the development of biomass energy (3). Also, the State Forestry Administration has decided to reserve two hundred million acreage of forest land, for cultivating the plants that specifically for the extraction of biodiesel (4). As a result, the carrying out of Champway in China fag end benefit from the strong support and approve up by the fundamental government when entree the China trade with biomass energy.Secondly, the Champway may benefit from the economic environment of China. As mentioned, China is experiencing a rapid economic growth with a GPD growth of 10.3 percent in January of 2011 (5). At the same time, Renminbi keeps appreciating against US dollar and Hong Kong dollar (6). As a result, the Champway may benefit from appreciating Renminbi, since Champway is operating business and selling energy for Renminbi in China. So the actual value of the profit gained is also appreciating. Moreover, refer to a speech of the Labor Department, the number of people seeking unemployment benefits rose by 26,000 to a seasonally adjusted 397,000 recently (7). This implies that the unemployment rate in China is rising. Thus Champway bay window also benefit from this circumstance as it can hire sufficient work people for their work in China.Thirdly, the Champway may benefit from the accessible environment of China. As people in mainland China become much educated and more environmental conscious (8). They are more likely to support products with environmental friendly features like biodiesel. As a result, the Champway may catch this opportunity to market biodiesel and benefit from the increase demand for biodiesel.Fourthly, the Champway may benefit from the ecological environment. China is rich in raw genuines. However, most of them are not explicated yet (9). With a slap-up depletion of raw material, it is insufficient to support the energy consumption of about 1.3 jillion population. As a result, biodi esel is acting as a perfect deputise of raw materials like petroleum. So Champway may take the chance to market biodiesel and benefit from the great demand it.DifficultyAs mentioned, there must be some uncontrollableies when entering such distinctive market. So here is the discussion of those difficulties.There are four difficulties to be faced when the Champway is entering the China market. Firstly, the Champway has to face an inauspicious political and legal factor. As the primordial government is deciding to even the income distribution in China, a new labor protection policy of minimum wage will be established (10). This policy will increase the wage take of workers. As a result, it is admonishing to Champway, since Champway has to hire a great number of workers for mental synthesis and operating the facilities of energy generation in China, and the increased wage level of workers may leads to an increase in the operation monetary value. So it is more difficult for Champw ay to dwell in this sector.Secondly, the Champway has to face an unfavorable economic factor. As the change magnitude popularity of biomass energy in China, agricultural product will become more valuable, since agricultural product is one of the inputs of biomass energy generation. Also, the market price of agricultural product has increased collect to the inflation. As a result, the operation cost for Champway to run the business in China increases and it may be difficult for Champway to survive with this industry in China.Thirdly, the Champway has to face an unfavorable social factor. Although the central government has emphasized to develop biomass energy, there is still no separate and definite guideline for put up of input and quality standard (11). Also, there is an unethical business culture exists in the China society imputable to the lack of well education. As a result, there is a malady in the biodiesel market. People are pretending the original biodiesel with a mou ld one (11). This phenomenon may create an unhealthy image for the industry and the industry will be negatively affected.Fourthly, the Champway has to face an unfavorable ecological factor. China is one of the most suffered countries in terms of natural disaster. According to the statistical figure from the United Nations, in the year 2008, China has the world superior firing of 110 billion overdue to natural disasters, which is 60 % of the loss of the whole world (12). So there is a frequent muzzy of agriculture exists. As a result, there will be an dubious supply of input for the biomass energy generation, and the company may unable to survive in China market with this industry.SuggestionAfter the discussion of the unfavorable factors for Champway to enter the China market, some suggestions will be given to surmount the difficulties as follows.Here are three suggestions that Champway can apply to dominate those difficulties. Firstly, in order to overcome the unfavorable mini mum wage and change magnitude market price of agricultural product, Champway is recommended to enter the China market through and through equity joint venture with a greatly financed or a state-owned biomass energy company like the Everbright International (13). So that it can stagger and share the costs and risks with its partner. As a result, the difficulty of high operation cost can be overcome.Secondly, in order to overcome the unfavorable counterfeit, Champway is recommended to deal with the problem with a well designed distribution and bum of the biodiesel. The company can develop and sell its original biodiesel through biodiesel make full station or biodiesel specialty store. So that people can soft recognize the genuine one and avoid buying the fake. This action can improve the company image by building confidence for customer to consume our product.Thirdly, in order to overcome the unfavorable unstable supply of biomass. Champway is recommended to deal with the problem with the use of ten-fold suppliers from different region in China. Since China is a huge land, natural disasters often occur only in a particular area. So by using multiple suppliers from different region, the company can immediately seek for supplies from other suppliers in other region, when some of them are unable to supply the company due to natural disaster.ConclusionTo concluded that, Champway can benefit from four macro-environments when entering the China market. They are political-legal environment, which is the support and back up by the central government economic environment, which is the appreciation of Renminbi and the large supply of labor social environment, which is the change magnitude environmental consciousness and ecological environment, which is the great depletion of raw material and the great demand for substitutes.However, Champway has to face four difficulties too. They are the minimum wage, the increasing market price of agricultural product, the counte rfeit biodiesel and the unstable supply of biomass due to natural disasters. In order to overcome the four difficulties, three suggestions are given as the solution. They are the use of joint venture, the development of biodiesel fill up station and biodiesel specialty store, and the use of multiple suppliers from different region.