PESTEL analysis is a model in marketing principles. It is used as an instrument by companies to track the environment they’re operating in or are planning to launch a new project or product. PESTEL stands for Political, Economical, Socio-Cultural, Technological, Environmental and Legal, which are going to be analyzed in this section.
Political Factors
The Chinese political framework represented by one-party communist dictatorship, creates an unbelievable engagement to the national strength. However, when the economic framework changed from the command economy to market economy in 1978, there were some issues developing the regional economy.
Currently, even though the central government has focused on decreasing the gap between different areas,
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Economical Factors
China is seen as one of the most energetic countries in the world when it comes to economic development. The new reforms in 1978 stimulated the Chinese GDP growth from 364 billion RMB to 63.6 trillion RMB within 30 years (chinability.com, 2015).
China has persisted to be a primary beneficiary of the world’s destination of Foreign Direct Investment in the latest period. FDI reports 27% of the value added production, 4.1% of national tax revenue, and 58% of foreign trade (usi.edu, 2010).
China was facing an economic growth and a huge development, even though the international financial crisis of 2008 left some marks on several aspects of China, above all the export-oriented light industry in southern China (chinapolitik.de, 2009).
The Chinese market could be part of a quite high inflation rate. The average inflation of China in 2008 was 5.97% (inflation.eu, 2015).
Companies that knew how to combine the Chinese taste with the Western management style, had also a big impact and success in China market, such as Hong Kong’s Café de Coral that offered a combination of Western and Asian meals (Ko,
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In fact, the Chinese population continues to grow steadily and this could change the social and cultural trends.
Another important point is the education; in fact China emphasize on the literacy rate that in China was over 90% (huebler.blogspot.ch, 2008).
China is known to be a country where the population prefers to receive implicit messages and not to make any idea. For those wishing to open a business in China, the key to success is the relationship with the private relationships with various stakeholders. Another problem in China is corruption. According Corruption Perceptions Index (CPI), china stat is positioned 72 among all 179 countries in 2008 (Transaprency.org, 2015). The damage caused by corruption can have serious effects, affecting banking, finance, government procurement, construction and especially for economic development. The year 2008 saw an exponential growth of middle-class and that aggravated the gap between urban and rural population. China changed its approach towards new product; especially form the West, based on new lifestyles and trends. This allowed Chinese people to focus more on quality satisfaction then quantity