Country Risk in Pharmaceutical Industry: China vs South Africa

Running head: COUNTRY RISK
COUNTRY RISK
Name of the Student:
Name of the University:
Author Note:

COUNTRY RISK1
Table of Contents
Introduction:...................................................................................................................2
Task 1.............................................................................................................................2
Evaluation of Risk..........................................................................................................2
Country Risk:.................................................................................................................2
Cultural risk:...................................................................................................................3
Financial risk:.................................................................................................................4
Commercial risk:............................................................................................................5
Evaluation of Opportunities:..........................................................................................6
Task 2.............................................................................................................................7
Destination country:.......................................................................................................7
Entry methods:...............................................................................................................7
Conclusion:....................................................................................................................9
References:...................................................................................................................10

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Introduction:
The company here mentioned named AUSMED is related with pharmaceutical
business of Australia with a good experience of long 10 years in the market. In the Australian
subsidiary there are more than 60 employees working to manufacture medicines, leading this
particular organisation to achieve the primary goals. The company has an annual turnover of
AUD of 30 million which is a quite large amount for a ten years old Pharmacy Company.
This is the reason why AUSMED is aiming to expand its business in other markets where the
health conditions of the citizen is demanding for drug manufacturing, stable and accepting
external environment and support of the governments. Here the pharmaceutical markets of
the two countries like China and South Africa will be discussed so that the risks of these two
countries can be identified and analysed. Based on these risk analysis the entry method of
AUSMED will be detailed.
Task 1.
Evaluation of Risk
Country Risk:
China is one of the most attractive market in the entire Asia and eastern part of Europe.
This is due to the fact that the market has the largest population and one of the strongest
powers in the economic aspect. The political and legal system have been improved from the
past years. The main three reasons why the foreign companies feel attracted to the market of
China are the country’s growth potential, size of the market and the low cost of labour. The
country unlike the past is becoming integrated with the other parts of the world as it opened
itself to an array of cross border economic activities. The political stability of the country
though supports the entering of foreign firms but strictly scrutinises all the forms and

COUNTRY RISK3
operations of the newly entered company. This leaves the new companies to face problems
regarding the import and export of the raw materials or manufactured goods. Economically
though the country has shown a potential urban growth and buying capacity of the customers,
the high inflation rate and high property prices can affect the business potentially. The
inflation rate is 2.80 which was 2.70 previously as pointed out (Tradingeconomics.com
2019). China’s Consumer Price Index (CPI) in July was 102.80 that was previously recorded
as 102.70 (Tradingeconomics.com 2019). The corruption perception index 2018 of China is
39% that makes it rank 87 among the 180 countries (Transparency.org 2019). The CPI index
of China reveals the factors like-