Pestel: Retailing and China

7657 Words Nov 29th, 2008 31 Pages
The PESTEL analysis `The PESTEL analysis stands for political, economic, socio-cultural, technological, environmental and legal analysis of forces that impact the business environment. It will be utilized to find the circumstances surrounding the market and as an instrument for understanding the market situation such as market growth/decline, business position, market potential and the direction of a company’s operations. It is very important for a company to consider its environment before starting to perform activities. As a first step on the way to enter and perform successfully on the Chinese market, knowledge about the macro environment will have to be created.50 In the following the six parts of the PESTEL analysis will be presented …show more content…
Hence China has an incredibly big population and people have got more money. This development has led China to be one of the most important economical powers worldwide, with a big potential due to the large population and the high growth rates. An interesting forecast is made on China, saying that China in 2015 is expected to surpass the United States as the largest economy in the world.57 The purchasing power of the Chinese population is an important measure, when looking at the attractiveness of the market for foreign companies. An attempted determination of this can be made by comparing the development in GDP with the development in the consumer price index (CPI) which reveals the changes in consumer prices over a period. For making the comparison possible the same period of time is used.` Figure 5.1.2 Consumer buying Power 1000,0 900,0 800,0 700,0 600,0 500,0 400,0 300,0 200,0 100,0 19 85 19 78 Index(1978=100 Consumer price index GDP per capita d s 19 94 19 98 19 90 19 92 Source: http://www.stats.gov.cn/tjsj/ndsj/2006/indexeh.htm - Statistical yearbook of China table 9.2 As shown the consumer prices have increased approximately 4.5 times since 1978. Compared to a GDP per capita increased 9 times and a GDP total increased 12 times, it is giving a picture of improved purchasing power in China. This makes China an interesting market for foreign

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