Strategic Analysis of Ugg Boots in China: Impact of Economic, Political, Socio-Cultural and Technological Change

This study analyses the impact of economic, political, socio-cultural and technological change on Ugg Boots in China. It provides insights into the Chinese market and its potential for Ugg Boots. The study also discusses the tax system, political environment, and technological advancements in China.

Running head: GLOBAL BUSINESS MARKETING
Global Business Marketing
Student’s name:
Name of the University:
Author’s note:

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Table of Contents
Introduction......................................................................................................................................2
Background information on products of Ugg Boots........................................................................2
Background information on China as chosen country.....................................................................2
Economic environment....................................................................................................................3
Political environment.......................................................................................................................4
Socio-cultural environment.............................................................................................................5
Technological environment.............................................................................................................5
Conclusion.......................................................................................................................................6
Reference List..................................................................................................................................7

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Introduction
Global marketing environment has been changing rapidly and competition among
different companies has also been increasing. Therefore, the companies are trying to penetrate
different market through watching the global business scenario. As stated by Rajogo (2016), new
changes can be opportunities for the marketers and the organisation can direct use the strategy of
global marketing in order to get the benefit. In this study, Ugg Boots is the chosen company and
strategic analysis is done to show the impact of economic, political, socio-cultural and
technological change in the company. In addition, I was a marketing manager have chosen China
as a country to do the strategic analysis.
Background information on products of Ugg Boots
Ugg Boots Pty Ltd is the registered company in Australia and it is specialized in the
sheepskin boots. Ugg Boots are specially sheepskin boots and these boots were originated in
New Zealand and Australia. These types of boots are specially made of twin-faced sheepskin that
has fleece on the inside and these boots have tanner on the outer surface with the synthetic sole
(Australianuggboots.com.au, 2018). The boots makers are skilled and each pair of boots is made
from beginning to the end by one handful employee. Ugg Boots are passionate about the team
working and it keeps the great Aussie icon and it is Australian made products. Ugg Boots believe
in quality before the quantity of the materials. Ugg Boots Pty Ltd is the member of Australian
Sheepskin Association and Australian Made Campaign.
Background information on China as chosen country
According to IMF, China is the world’s largest economy in terms of Purchasing Power
Parity (PPP). China is an Asian country that shows the GDP growth with 6.9%. Current GDP of
China touched $13.3 trillion and GDP per capita is $10,300 (Day, 2016). China is considered as
the fastest growing economy in Asia and it has more than 1.5 billion people's market. China has
been experiencing the changes in the economy and business perspective. China offers
entrepreneurial economy as the companies can expand the business and it can set the global
benchmark for the prices. The labour cost is comparatively low in China and mainly with the
development of Sichuan province; China offers vivid opportunity in business.

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Economic environment
Global competitors and global markets have replaced the local markets and local
competitors and volatile and unpredictable global economic environment will produce a threat to
the company. China ranks 2nd in nominal GDP ranking and the inflation rate is 1.4% low (Cheng
& Yiu, 2017). China has a labour force of 803 million. Service industry provides almost 51.6%
and China industry provides 30% to the GDP of China. GDP rate in China suggests that each of
the individuals provides values in China and it increases the consumers' purchasing power.
UNCTAD published the World Investment Report and China was ranked third according to the
largest FDI after the UK and the USA. China was ranked second as a selection for a most
attractive place for multinational companies (Gilboy, 2017). The Chinese economy was ranked
77th out of the 190 countries for the suitable business climate for expanding the business,
according to World Bank. FDI inflows in China grew steadily from 2012 and FDI rose to the
high of 135 billion USD. China provides FDI in 11 free trade zones and it hit almost USD 16
billion in the year 2017 (Tang & Guo, 2017).
FDI 2014 2015 2016
FDI Inward Flow 128,500 136,610 133,800
FDI Stock 1,085,290 1,220,900 1,300,400
FDI Inwards 2.7 2.8 2.8
FDI Stock 10.3 10.9 12.1
Table 1: FDI in the figure in China
(Source: En.portal.santandertrade.com, 2018)
China has Chinese National Development and Reform Commission for better
management of FDI and it addresses the relationship between foreign investment and national
security investment. China joined WTO in the year 2001 and it showed the rapid growth in the
field of import and the leading export material of China are antimony, tin, mercury, manganese
and tin (Wu, 2016). China has good infrastructure to grow the business as it provides a
considerably cheap human resource to Ugg Boots. World Bank expects the economic growth of
China will touch 6.5% in 2019 (Guo et al., 2017). The growth is impressive and Chinese market
might feel the worry in the trend of China with high property prices and reserve requirement in
commercial banks in China is nine times higher than previous years.

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Political environment
China is a socialist country under people's democratic dictatorship based on the peasants
and workers and led by the democratic dictatorship. The government consists of the people's
congress and political party system follows the multi-party cooperation (Lee, 2018). Communist
Party of China (CPC) controls the leadership and government of China consists of a multi-party
system. The government system ensures that there will be the only party to hold the power.
China follows both formal and informal rules that must abide by the influence of the country. As
stated by Meng, Pan & Yang (2017), political force in China are unsettled for the past few years.
However, the government of China is mainly focusing on the development of e-commerce. The
political condition of China is stable; however, China does not have a good relationship with all
countries. China and Australia political relation are often called as Sino-Australian relations in
business (Tsai & Dean, 2014). In China, if Ugg Boots wants to enter, the company should invest
as much money as they can to maintain the market status and stability. The Chinese government
took the initiative of Bolt and Road, where the government is going to invest US$4 trillion to
develop the regional and infrastructure to access more foreign investment China (Yang & Jiang,
2015). China is trying to invest US$750 billion for the overseas investment and the strategic land
with maritime routes. The Chinese government took International Green Finance Seminar in
Beijing with seven international countries for environmental protection of foreign economic
organisations. China has strong legislation for the foreign business and this framework is
designed to mitigate the conflict among the organisations.
Small-scale organisations 10-15%
Standard rate 25%
High-tech organisations 15%
Companies engaged business in certain regions 15%
Table 2: Tax rate in China
(Source: En.portal.santandertrade.com, 2018)
Foreign companies in China can join in indirect business activities through a
representative office in China. Representative Office (RO) is imposed as a similar tax in China
and they are not permitted to sign the contracts or direct the business operations. Foreign

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organisations have to provide business tax (3-20%). The companies must provide 9 times of tax
per year and the total share of taxes will be 68% of the profit (Lin & Du, 2017).
Socio-cultural environment
In China, the labour cost is lower than the other developed countries and many of the
MNEs have its offices in China. Human Rights Practices showed that China has been continuing
abuses to the human rights in violation of recognised norms (Zheng, Wang & Hu, 2015). Human
Rights have been violated on speech, press, restriction on the association, religion, worker rights
and limitation of birth. In China, age distribution and population growth fluctuate and these can
change the social trends and values of cultural domination. Social factors are related to the
lifestyles, religion, emigration and education. As stated by Li & Chen (2017), China follows the
collectivist culture. Literacy rate in China has been crossed 90%, therefore, the customer's
perception may change with time. Acceptable quality of life in China is a major concern as the
population is high. The organisations may think that there will be maximum customers for the
products. Ugg Boots can get the benefits of having large numbers of customers. China scores
almost 87 in Long-term orientation culture that shows China follows the pragmatic culture.
Chinese customers provide emphasis on the quality both real and perceived (Makri &
Schlegelmilch, 2017). Chinese people provide importance to the family and travelling as well.
Technological environment
China is a technologically advanced country where the companies use high technologies
for developing the products and services. Ugg Boots can take the help of Chiese technology in
order to manufacture the products on time with quality. Ugg Boots has its manufacturing sites in
Australia, it can start manufacturing the products in China also. If the organisation starts
manufacturing in China, it would get the help of technologies and skilled employees of China
(Zhu & Habisch, 2018). In technological factor, Ugg Boots can take the help of social media and
internet media in order to do the publicity as China has more than 500 million internet users.
Internet-based business will grow in China in next few years. New Production technology can be
helpful for the business to grow with taking help of technology (Chan & Tong, 2014). Ugg Boots
can take help of technology through new distribution mechanism, such as the internet.
Technological development will be helpful when urbanisation and energy intensity will be done

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incorrect way. Technological advancement helps the business to grow taking the help of internet
and mobile communication. On the other side, the major technological issue in Australia lies in a
B2C industry where the customers do not believe in online payment method (Child & Mollering,
2013). The customers have high Uncertain Avoidance and Long-term orientation level.
Conclusion
The global business environment consists of distinct elements like globalization,
international firm management, national business environment and international business
environment. In a previous time, the Chinese economy was based on mainly agrarian and it has
transformed now with the limited private sector. Ugg Boots will be profitable if they take the
decision to enter Chinese market as China has been observing steady economic growth and
stable politics. In addition, technological advancement can provide help to grow the business
through internet. Taxes are higher in China and customers' perception is changing in China.

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