Pros and Cons of Doing Business in China - A Macro-Economic Analysis

Macroeconomics

Contents
INTRODUCTION...................................................................................................3
MAIN BODY.........................................................................................................3
Pros and Cons of doing business in China...................................................................3
REFERENCES.....................................................................................................12

INTRODUCTION
The expansion of the business requires setting effective policies and owing to the
saturated local business, the company needs to develop a broader market to lay the
groundwork for the future business development of the company. As per the long-
term high rate of economic growth, China has been a leader in economic gain in
comparison with developed countries and developing countries, which is rare in the
development history of each nation. China is the second-largest economy in the
world, in terms of GDP and currently is ranked second, so a growing number of
multinational companies are willing to establish new companies and promote their
business in China. This report consists of analyzing the advantages and disadvantages
of entering into the China market for future business layout. Along with analyzing the
local labour export and employability, government policies, and entrepreneurial
environment with the theme of entry and development business in China market.
MAIN BODY
Pros and Cons of doing business in China
Pros: There are mentioned different benefits to a company that get after entering
into China market that are mentioned below:
Business cluster: In a certain field, a business cluster is a geographic
concentrations of related enterprises, distributors, and related companies. Clusters are
thought to boost productivity levels, allowing them to operate on a world - wide scale
(JANUŠKA, M.2011). India and China have the biggest labour supply and the most
manufacturing in the globe. By examining their regional educational standards,
money supply, accessible manpower, transport, and equipment, the reasons why firms
want to expand business in the country may be validated.

Source ： UNESCO Institute for Statistics (2020)
As shown in the graph, China's regional standard of training has always been
higher than India's, and it continues to rise, demonstrating that the quantity and
educational level of employees in the labor industry in China is likewise higher than
in India. Furthermore, during the last few years, China has popularized the bilingual
system, with the government enacting a slew of training materials aimed at
encouraging English acquisition beginning in primary school. In China, millions of
high school graduates with a rudimentary understanding of The language and a great
willingness to learn enter the workforce to fill the earnings gap. All of these benefits
are significant for organizations trying to hire local workers in the upcoming.
Labor Productivity
While compared production in India to other nations, we are often drawn to the lower
labor costs, but businesses often neglect one important piece: performance.
Despite having a large labour market and facilities, India's producers are further
behind the rest of the country in respect of production line design, operations
management, cleanliness, and repair, which is a primary reason for their low growth.
In addition, the efficiency of Indian manufacturing employees is approximately twice
less than that of Chinese workers (McKinsey & Company 2012).
By analyzing the GDP of 2 nations, one can have a better grasp of personal
production per capita. Calculated for purchasing power parity (PPP), per capital GDP