Report: Economic Analysis of China for Business Expansion Strategy

This report analyzes the economic feasibility of expanding a business into China. It begins by highlighting the increasing need for globalization and the strategic importance of selecting the right country for expansion. The report focuses on China, examining its economic indicators, including GDP growth, urbanization, population, and technological advancements, to assess its suitability for foreign investment. It explores China's GDP trends over the past five years, highlighting the impact of urbanization, population size, and technological innovation on economic growth. The report also examines unemployment rates and per capita income, providing a comprehensive overview of the country's economic environment. The analysis concludes that China's economic growth, driven by factors such as urbanization and technological progress, makes it an attractive market for business expansion. The report uses data and graphs to support its findings, offering a clear picture of China's economic landscape and its potential for business success.

ECONOMICS ASSIGNMENT

Globalisation has transformed into a necessity rather than a choice for the business
organisations and this has been due to the intensity of the competition which has been rising
on a high seed. The increased competition and the increasing demands of the people has
brought up a situation where in order to survive the business, the external expansion is
required. Going global seems an easy but expensive task but actually it is more of a strategy
based action than a monetary one. The selection of the specific country for the expansion
requires a number of exploration and considerations. The selection needs to be made on the
acknowledgement of the economy of the country to which the business is to be expanded.
Economy of the country represents the monetary and the business scenario of the country
which are the two most important ingredients of success in the expansion.
As an employee of the concerned company, China has been chosen for the expansion of the
company and the selection has made on the basis of the exploration of the China’s economy.
China being located on the East Asian region, with a population of 1.404 billion, is expected
to provide the company with a wide range of customer base (Kirkby, 2019). The recent
transformation of the economy of the country from a central planned structured economy to
the market based economy would also be favourable for the expansion as the products served
by the company would have large market segment. The investors of the company would be
benefited through the improving economic conditions of the country because of the
transformation which has supported the social development of the country too. Though these
actions would be favouring the investors there are certain other economic factors of the
country too which would favour and support the company’s expansion in China.
A country’s economy could be explored through the exploration of the Gross Domestic
Product, Inflation Rate, Unemployment Rate, Quantities of Specific Good, exports and
imports. These factors are the most important and the most accurate measures of the
economy, no matter which country is to be explored. The interconnection among all the
economic factors are direct and thus, the relation brings in the exact picture of the economy.
Concerning China, the Gross Domestic Product would be the exploring factor as this would
help in keeping the research simple yet the other factors would also be known as it would be
a reflection of the other factors (Kwong, 2015). Gross Domestic Product which is the total
amount of the product that has been produced within the country for a specific period of time,
has been one of the ingredients of the China’s economy which has been on the gradual
growth rate. The five year growth of the GDP could be assessed in the graph below which
reflects the fall in the GDP through the falling trend but if acknowledged through overall

basis, then the China GDP has grown by average rate of 9.52 percent from 1989 until 2019.
The current GDP that is the first quarter of 2019 has been marked with a GDP of 6.4 percent
(Zheng & Huang, 2018). The overall growth of the GDP of China could be utilised and
concluded that the country has been utilised its resources in the most efficient manner which
has provided the people of China with sufficient amount of purchasing power which
contributed to the overall growth.
Figure 1: Growth in GDP in last 5 years
(Source: China GDP, 2019)
The connection between the country and the GDP of the country could be assessed through
exploring the three main areas that is Urbanisation, Population and Technology. It is believed
that these three specific ingredients of the country has been favouring the GDP of the country
and on assessing these variables, the exact reason behind the growth could be known. It
would also help in understanding the future growth of the same through these three factors.
a. Urbanisation
Urbanisation in China has been initiated and this act by the government has provided
the country with a wide scope of development which in return has been favouring the
foreign investments. The foreign countries has been interested in China and this has
brought in huge foreign investments for the country which has been utilised by the
country accurately and thus, it has been adding value to its GDP on an overall basis.
The foreign countries has been getting profitable return which has been attracting
more and more investments (Mathews & Tan, 2016). Thus urbanisation has led to the

growth of per capita of the country and thus, it has been contributing to the GDP
growth. The company would be benefited through expanding its business to China as
the increase in the per capita income would favour the action.
Figure 2: Growth in Per Capita Income
(Source: China GDP per capita, 2019)
b. Population
China being the second largest populated country in the world with 1.395 billion for
the year 2018, has been provided with a wide and broad range of people for adding on
to the productivity of the country. The impact on the per capita output growth has
been quite wide and this has been favouring the GDP growth of the country. The GDP
per capita for the year 2017, was recorded at 7329.09 US dollars which is 58 percent
of the world’s average (Aiguo, 2016). This reveals that the expansion of the company
in China would receive the support and thus the growth would be achieved. The
unemployment rate of China has fallen from 3.80 percent in the fourth quarter of 2018
to 3. 67percent in the first quarter of 2019. This falling unemployment rate reflects
that the GDP has been increasing and it would also be favourable for the company’s’
expansion.

Figure 3: Unemployment Rate of China
(Source: China Unemployment Rate, 2019)
c. Technology
The technological innovations has been the most in China which has been favouring
the increase in the productivity of the country. The technological innovations has been
providing with wide range of expansion and usability of the products which has been
favouring the increased output. The use of technology in the production and almost all
the aspects of actions in China has provided with a rate of GDP and thus this has been
impacting other economic factors of the country too (Selden, 2016). The expansion of
the company in China would provide the company with wide range of technological
usage which would reduce the cost of the company as a whole.
The trend that has been followed in China concerning GDP, has been of fluctuating nature
but after the downfall of th e 2007, the trend has been on the upward, which is expected to
provide some more attractive figures in the future.

Figure 4: GDP trend for last 10 years
(Source: China GDP, 2019)
Figure 5: Unemployment Rate Trend in last 10 years
(Source: China Unemployment Rate, 2019)
China is an emerged market where the growth and development has taken place at faster pace
and is expected to provide with more expansion in the future (Dittmer, 2018). The trend of
accelerating its economy through various economy factors has been taken up and this has
been favouring the multinational companies at large. The expansion in China would provide
the company with wide and broad scope of expansion and development. The idea of

expansion in China has been made accurately and through rigorous research which has been
presented in through the various graphical and other presentations.

References
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China Unemployment Rate (2019) | Data | Chart | Calendar | Forecast | News. (2019).
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