PESTEL Analysis: Pollution Eating Bikes in China

This report analyzes the Chinese market for pollution-eating bikes using a PESTEL framework. It examines the political, economic, and social factors that influence the potential success of a company selling these bikes in China. The report highlights the growing concern over air pollution in China, the booming e-bike market, and the increasing popularity of cycling as a mode of transportation. It also provides recommendations for a pollution-eating bike company to capitalize on these opportunities and gain a competitive advantage.

PESTLE ANALYSIS
POLLUTION EATING BIKES

TABLE OF CONTENTS
EXECUTIVE SUMMARY...............................................................................................................1
INTRODUCTION..........................................................................................................................2
PESTEL REVIEW AS A STRATEGIC MARKETING TOOL.................................................................2
PESTEL ELEMENTS......................................................................................................................4
POLITICAL ELEMENT...............................................................................................................4
ECONOMIC ELEMENT.............................................................................................................7
SOCIAL ELEMENT..................................................................................................................10
RECOMMENDATIONS AND CONCLUSION............................................................................12
REFERENCES.............................................................................................................................13
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EXECUTIVE SUMMARY
The E-bike market in China is growing at a rapid rate. Among all the other countries, China
has observed the biggest rise in the sales of E-bikes in the last years. The activity of cycling
has become common in all the parts of the country which encourages the rise of bike-
sharing business. China is facing the problems of smog that is justified by the fact that high
levels of air pollution have exceeded the limit set by the pollution control board and World
Health Organisation.
The country’s government has launched several campaigns for environmental control and
spreading awareness about the use of eco-friendly vehicles among which the E-bikes are the
most popular vehicles used by the people. So it is clear that the government of China has a
clear aim of improving the cycling infrastructure so as to enhance the attractiveness of using
bikes in China.
China was given a huge amount of financial support for supporting the E-bike project. The
projects are aimed at boosting the competitiveness of the urban infrastructure to support
the better conditions for Ecycling. The examination and evaluation of the external
environment is an important aspect to be considered when setting up a company that sells
the pollution-eating bikes in China.
The analysis of the macro environment demonstrates that the country is prone to smog and
is suffering great environmental damage that needs to be controlled and one of the
methods is through promoting Eco-friendly vehicles for commutation.
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INTRODUCTION
A business report will be prepared for assessment of the China market with the help of a
marketing tool for a company named as “Pollution Free Bikes” established for selling the
pollution-eating bike in China. The PESTEL will be used as a strategic tool of marketing for
analysis of the factors that can have an impact on the establishment and success or failure
of the company. The report will analyse 3 elements of PESTEL out of 6 namely Political,
Economic and Social. At the end of the report, recommendations will be suggested for the
organisation for giving more emphasis on the aspects that can contribute more towards the
success of the company.
PESTEL REVIEW AS A STRATEGIC MARKETING TOOL
PESTEL analysis is a tool or a framework used by the vendors for analysing and monitoring
the external environmental factors that influence the decision making process and
operations within an organisation (Yüksel, 2012). The results of the PESTEL analysis is
utilised for identification of the weaknesses and the possible threats used in the SWOT
analysis. The factors that are analysed in the PESTEL analysis are the political,
environmental, social, economic, technological and the legal factors. It is almost
unmanageable for an organisation to control all the external factors and direct them, but
the consequences of these factors are important to be considered. It is essential for the
organisations to consider and check the changes in the macro environment at frequent
intervals of time so that they can sustain in the market and also gain a competitive
advantage for the long duration of time in an unstable and expanding business
environment.
PESTEL is a framework that can be used for a number of factors beneficial for the business
like for strategic planning, product development, planning for the organisation etc.
Furthermore, PESTEL analysis is carried out in the course of the launch of new products by
the existing company or a new company emerging in the market that is focused towards
entering the market of a new geographical region and a new market route. The analysis of
the external environment has two basic functions out of which one is informing about the
environment that needs a research and second one is concerned with providing information
regarding prediction of future conditions and status of the company that it is expected to
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face (Dockalikova and Klozikova, 2014). The framework of PESTEL is liable to different
perspectives and after that, all the factors can be completely analysed and evaluated in the
full representation.
Strengths Weakness
With the help of PESTEL analysis, the
organisations are well aware of the latest
and upcoming trends and the conditions
and critical situations that the companies
can face in the upcoming times
The external environmental factors are
unstable and also irrepressible, so there is a
need to conduct PESTEL analysis at
frequent intervals
The information that is deeply researched
with the help of PESTEL helps and enables
the organisations for exploiting and utilising
to full extent new opportunities
It can be a very nominal framework in cases
where the people come from various
backgrounds and have ascertained and
different opinions
This type of analysis is also easy to conduct The information to be researched may
sometimes need the users to pay more
expenses that can also be more time
consuming
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PESTEL ELEMENTS
The PESTEL analysis framework will be used for identifying the influence of the macro
environment and also predict the potential conditions and situations that the pollution-
eating bike company may face in the coming future.
POLITICAL ELEMENT
In the last years, the level of smog in China has hit very high levels and has increased to a
great extent among the world records (Zhou, et al. 2015). China, which is progressing
country has been continually struggling with the problem of air pollution that is caused by
pollution from vehicles and industries and also by the cold snaps that have led to lakhs of
households in China to burn cheap material for the purpose of heating up their homes in
winters.
The pollution of air is caused that results in an increase in the concentration of PM, ground
level O3 and NO2. Here PM10 and PM 2.5 will be highlighted upon (Statista, 2018). These
have been registered on the websites and by the World Health Organisation in terms of Air
Quality Index.
Figure 1: PM 2.5 pollution level China
Source:[https://www.statista.com/statistics/690823/china-annual-pm25-particle-levels-
beijing/]
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In 2017, the concentration of PM 2.5 level in China was 121. 96 % that has exceeded the
limit values. In the meantime, the average concentration of PM 10 is also higher than the
limit decided by the pollution regulatory board in China are some of the parts of the country
(Zhang, et al. 2014). In the year 2008, the pollution level in terms of concentration of PM
2.5 was the lowest as compared to the later years.
In respect to the Thematic strategy based on Air pollution, the increase in the levels of PM
2.5 is very much hazardous for the people as well as the environment.
Figure 2: PM 10levels in China
Source: [http://www.mdpi.com/1660-4601/12/8/9967/htm]
The PM 10 levels in the year 2010 increased to a great extent in all of the cities of China that
included the major industrial areas of the country (Hao, 2015). It is expected that with the
help of pollution reduction tools and environmental protection campaigns, the levels of
smog are expected to decrease in the coming years.
The Greenpeace East Asia has launched several campaigns with the partnership of many
environmental protection agencies for supporting of the launch of environmental protecting
pollution free bikes. The anti-smog bikes launch has been supported by the government so
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their launch by companies is easy. The government has also urged to make the people
aware about using the pollution free bikes for reducing the level of air pollution.
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ECONOMIC ELEMENT
The E-bike sales in China has gained a boom as compared to the rest of the world. The
forecast of the sales in E-bikes or pollution-eating bikes in China has been given in the graph
given below. In 2016, the sales of bikes in China annually touched the figure between
30,000,000 to 35,000,000 (Goodman, 2010). The growing percentage of E-bike sales has
surpassed the other countries facing the same levels of pollution which are the big market
leaders like Germany.
Figure 3: People using E-bikes in China
Source:[https://www.environmentalleader.com/2016/08/li-ion-segment-driving-global-e-
bike-growth/]
China has led in the sales of E-bike in the market which makes it clear that the popularity of
pollution-eating bikes and also E-bikes in increasing in the country. It is the perfect time for
the Pollution eating Bikes Company to enter the China market to gain immense growth and
popularity (Yang, 2010).
There have many bike sharing start-ups emerged in China due to the smog levels increasing
day by day (Owyang, et al. 2013). The statistics are given below about the companies that
have entered the China market and their successful flourishment. The company Ofo has
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gained highest funding of 450 million dollars and it is followed by Mobile Company that has
generated 300 million dollars.
Figure 4: Bike sharing companies in China
Source: [https://www.theatlas.com/charts/r1duYxhtx]
There is a huge scope for the pollution-eating bike companies to enter the market with
respect to the funds gained by the e-bike companies by observing the statistics given in the
above figure.
In the figure given below, the sales of E-bikes as compared to motorcycles and bicycles has
abruptly increased since the last years from the year 1998. This shows the potential of the
pollution-eating bikes in China. It has been observed that the cycling culture in China is
increasing at an abrupt rate (Wu, et al. 2012). The residents of China often use Cycles as the
main mode of transportation especially the E-bikes and therefore as a result, the market
value of the pollution-eating bikes can be very high. From the year 2004, the sales of E-bikes
in China has raised above 7 million which is a big figure that ascertains the success of the
pollution-eating bike in the country.
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Figure 5: Statistics of vehicles in China
Source: [https://www.sciencedirect.com/science/article/pii/S0166497214001254]
After analysing all the figures and statistics illustrated above, the economic scope of the
pollution-eating bikes in the country like China is diverse since all the factors for the
successful thriving of a pollution-eating Bike Company are in the favour of the establishment
of such company which makes and opens scope for such companies to enter the market.
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SOCIAL ELEMENT
The use of E-bikes have become very common and is a popular trend in China. There are
many governmental organisations and private agencies that are working towards promoting
the use of eco-friendly bikes so as to contribute towards environmental protection. The
reports have illustrated that the trends for cycling in China has been continually increasing
and is expected to increase and rise in the coming years (Kan, et al. 2012). In the graph
below, the population is divided into the age groups and bifurcated as male and female. The
major population is between 25- 35 in China which is the adult population of both male and
female who are most expected to use the automobiles for going to their jobs and
commuting to other places for a day to day requirements (Liang, et al. 2014). After that, the
people among the age group of 45-49 is the largest in China. In the country, people are
more concerned towards their health that encourages them to use vehicles that are good
source of exercise and also are aware of the smog problems in the country. This will urge
them to use the pollution-eating bikes to a great extent.
Figure 6: Population by age groups in China
Source: [https://www.indexmundi.com/china/age_structure.html]
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The practices of bike sharing are also increasing in China which can be eliminated if the
pollution-eating bikes will be launched (Rohde and Muller, 2015). This will eliminate the
problems of smog in the country and also will enable and make it feasible for the people to
go to various places without relying on one another and that too contributes to the
environment by eating the pollution-eating bikes.
Figure 7: Pie chart for bicycle usage
Source: [http://bike-sharing.blogspot.in/]
According to the Pie chart given above, it is shown that China is the country in which the
bicycle programs for the use by the public is most successful (Sun, et al. 2011). By the end of
the year 2016, in China, there were around 37 % of the public that has started using the
bicycles for the daily commute. This shows the potential of success of the pollution-eating
bike firm in China.
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RECOMMENDATIONS AND CONCLUSION
RECOMMENDATION
After analysis of the macro factors that may affect the company, it is recommended that
the company can create more awareness among the public about the use of pollution-
eating bikes rather than just eco-friendly bikes. The company can also launch various
programs for promotion for its pollution-eating bike that is eco-friendly and helps in
eradicating the environmental problems. The existence of top E-bike selling companies can
be a threat to the company can launch events for recognition of its new product and
spreading awareness among the people about the benefits of the use of the pollution-eating
bike. The organisations in China that are working towards environmental protection and
removal of smog must be communicated for participating in campaigns so as to get in light
and being recognised by the people. Also, the company must establish a partnership and
work in collaboration as a business partner with Ofo or Mobike that are the topmost public
bike sharing leaders in China that will benefit the company by easily reaching a large group
of urban users that use the services of the bike sharing companies and can easily penetrate
the market.
CONCLUSION
From the analysis of the external factors namely the social, political and the economic
factors of China with respect to the requirements by the pollution-eating bike, it has been
observed that all the factors are in favour of the establishment of the company and there
are some recommendations that will help the company to gain competitive advantage over
other existing companies and also gain considerable growth in the market of China. The
company has the aim to contribute to the protection of the country from smog through the
launch of the pollution-eating bike which is possible through analysing the external factors
that may have an impact on the company.
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