Report: Business Environment Analysis of China for Rowlinson Knitwear

This report analyzes the business environment in China for Rowlinson Knitwear, a UK-based clothing manufacturer considering market diversification. The analysis employs the PESTLE framework to assess political, economic, social, technological, ethical, and legal factors impacting business operations. The political analysis highlights the helpfulness of the local government and also the negative impact of territorial disputes. The economic section discusses China's economic growth and cheap labor costs, as well as the impact of high interest rates. The social and cultural analysis emphasizes the importance of understanding Chinese culture and the increasing purchasing power of the population. The technological section notes China's technological advancements. Ethical and legal considerations address the importance of ethical conduct and compliance with Chinese laws. The report concludes that while China offers opportunities, Rowlinson Knitwear must develop effective plans to mitigate potential challenges.

Individuals in Society project
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Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
Analysis of Business Environment of China..........................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
The business environment is complex and contingent in nature due to which an
organisation which are trying to diversify its business into different countries are properly
analysed complexities of business environment on the basis of which marketing strategies will be
developed. The present assignment report is based on Rowlinson Knitwear company of UK
which is engaged in manufacturing clothing products. They have decided to diversify its business
to China. For this, marketing strategies are made after analysing several factors of external
environment in China through using PESTLE Analyse (Baker, 2014).
TASK
Analysis of Business Environment of China
Business environment consists of several influencing factors which includes political,
economical, social, technological etc. which affects the business operations of an organisation
either in negative or positive manner. Thus, it is required to analyse such factors carefully
through conducting PESTLE Analysis:
Political: It is related with political conditions of country which can affects business
operation either in positive or negative manner. Local government system is more helpful in
encouraging business to do in China. For example, free trade zones, loans etc. are such policies
which are benefited to Rowlinson Knitwear. It brings positive as well as negative impact on the
decision taken by Rowlinson Knitwear regarding diversifying business to China. The positive
impact is that Local government system of China is more helpful in encouraging business to do
in China. For example, free trade zones, loans etc. are such policies which are benefited to
Rowlinson Knitwear. On the other hand, negative impact is due to stability of China government
due to which changes in existing rules and regulations are very low. For example, tariffs are high
in china due to which it becomes more costly for Rowlinson Knitwear to operate its business in
such country. Territorial disputes is also one of the negative factor that affects the diversifying
decision of Rowlinson Knitwear (Berger and Herstein, 2014).
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Illustration 1: China GDP Annual Growth Rate. 2018
Economical: It is related with the fluctuations in economy of country. It includes several
factors such as taxation, inflation, interest, economy trends, internation trade, import and export
of goods and services. It can effects either in positive or negative way on the business decision of
Rowlinson Knitwear related with diversifying business to China. The positive impact is that
China has higher economic growth which is 6.7% at present times. In addition with this, due to
having large population the cheap labour cost is also very low due to which Rowlinson Knitwear
can easily recruit or hire labour in China. The population under below poverty line is approx.
10% which means the individuals of China are more capable to spend more on clothing products.
On the other hand, the negative impact is having higher rate of interest on Loans in China due to
which it increases cost of business if raising funds from different sources (Fifield, 2012).
Social and cultural: It is related with interest and standard of living of people which is
increased in China due to urbanisation. Furthermore, the government of China invest more in
education industry with a motive of contributing more to the GDP of country. Due to this, the
people prefer to buy quality products instead of purchasing local products which may brings
losses to them in near future. High economic growth increases purchasing power of people of
chine which helps in increasing sales of Rowlinson Knitwear. For this, it is important for
Rowlinson Knitwear to first conduct research in order to understand the culture of people living
in China and on the basis of which make changes in design, pattern and clothing material. This
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will help in attaining stability in china market environment through fulfilling the needs of
targeted people in China (MacGregor, Doyle and McEachern, 2015).
Technological: It is related with technological advancement. China have their own
technological power which are more efficient in manufacturing and production process.
Therefore, an organisation who decide to diversify its business to china should not have worry
about their production of goods and services. Emerging technology, research and innovation
maturity of technology, Competitors technology development, intellectual property issues these
factors will influence the business and customers. These are related to innovation that may
change the operations of the business and the market positively or negatively. These factors
include modification in digital technology, automation, research-practices and development.
These also affect the price and attribute of the business, and find out the barriers to launch and
nominal efficient production level (China Labour Costs. 2018).
Ethical: It is related with diathesis of people which are enhances in China due to high
education level. Rowlinson Knitwear need to perform in ethical way through offering quality
products and services thus If failed then it may faces legal consequences in form of case filed by
customers due to having proper knowledge about their rights. The restrictions and laws
implemented by China Government for foreign business are more strict due to which it is
important for Rowlinson Knitwear to comply with all regulations and perform in an ethical ay
which cannot harm interest and behaviour of Chinese people ((China GDP Annual Growth Rate,
2018).
Legal: It includes the legal laws and legislation which directs an organisation to perform
in ethical way. In China, the government has implemented labour law in order to protect labour
benefits. Therefore, it is essential for Rowlinson Knitwear to follow such rules in order to attain
stable position in China. The Chinese government has made various laws and standards for the
foreign companies to operate their business in China. Forms of representation, registration and
licensing requirements, foreign exchange regulations etc. are some standards which need to be
follow by Rowlinson Knitwear to reach their products and services to Chinese market otherwise
it damages their existence in China market environment. For example, for the purpose of
marketing, Rowlinson Knitwear need to comply with Chinese national GB standard (Pierce,
2013).
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CONCLUSION
It has been concluded from the above project report that Rowlinson Knitwear can
diversify its business to China but facing some difficulties related with several factors such as
political, economical, social, technological etc. Thus, it required management of an organisation
to make an effective plan and policies in order to take advantage of favourable business
environment of China and eliminate influencing factors which can negatively affect their
decisions of diversifying business to China.
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REFERENCES
Books and Journals
Baker, M. J., 2014. Marketing strategy and management. Macmillan International Higher
Education.
Berger, R. and Herstein, R., 2014. The evolution of Chinese business ethics. Management
Research Review. 37(9). pp.778-790.
Fifield, P., 2012. Marketing strategy. Routledge.
MacGregor, S., Doyle, T. and McEachern, D., 2015. Environment and politics. Routledge.
Pierce, S. J. S., 2013. Market analysis and business process development for a managed mid-
market export solution.
Zemlickiene, V. and Maditinos, D., 2012. Marketing strategy formulation for innovative product
development process. Business: Theory and practice. 13. p.365.
Online
China GDP Annual Growth Rate. 2018. [Online] Available through:
<https://tradingeconomics.com/china/gdp-growth-annual>.
China Labour Costs. 2018. [Online]. Available through:
<https://tradingeconomics.com/china/labour-costs>.
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