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Essay: Political analysis – international markets / China

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  • Subject area(s): Business essays
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  • Published: March 10, 2016*
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  • Words: 742 (approx)
  • Number of pages: 3 (approx)
  • Political analysis - international markets / China
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The political atmosphere of international markets contains any national political element that can have an effect on the organization’s decisions in operating in that country. Politics are a major factor in companies making international investments and market development decisions. Politics are inherently linked to a government’s outlook towards business and the liberty within which it permits companies to operate in that country [1].
Generally, China investment legislation lacks transparency. The government policies and regulations linked to investments are not clear. The policies are not applied consistently through different provinces. There three main investment policies used in China namely; contract joint venture, wholly owned foreign investment, and the equity joint venture. Most investment ventures are structured under the equity joint venture model [1] [2].
7.3.2 Economic analysis
An understanding of economic developments and how they impact the international marketing strategy is vital for companies to succeed in international markets. The understanding of the global trading set-up such as; global or regional institutions and various trade agreements is of utmost importance. The South African Companies can benefit from the BRICS trade agreements. Companies need to familiarize themselves with the host countries’ economic policies and how those specific markets are developing economically to make an informed investment decision [6] [1].
Below are the basic economic indicators for China, Brazil and India;
Factors China Brazil India
Population 1.368 billion 203 million 1.239 billion
GDP $10360 billion $2346 billion $2067 billion
GDP Growth 7% 3.90% 2.06%
GDP per capita $3866 $5970 $1263
Unemployment 4.04% 7.60% 4.90%
Inflation 2% 9.53% 3.66%
FDI Inflow $85.34 billion $5.246 billion $1.943 billion
Table 2: Economic Indicators: (Source-
7.3.3 Social/Cultural analysis
Chinese culture has a huge influence on the marketing sphere. The Chinese social and cultural values are based on social interactions and interpersonal relationships. Chinese nationals are relying on personal relationship “Guanxi”. The word “Guanxi” is translated “special relationship” or “special connections”. “Guanxi” is key success factor in the early stages of entering the Chinese market. International companies cannot succeed unless in China unless they apply ‘Guanxi” [12].
“Guanxi” is established by gift-giving, meetings in restaurants, overseas trips or even sponsoring the children of Chinese officials to attend college abroad. The dynamics of this practice can become beneficial to companies investing in China [1] [12].
7.3.4 Technological analysis
Technology is a key driver of international marketing towards a global market environment. The effect of advances in technology is seen in all spheres of the marketing practice. Data gathering, control and management mechanisms of markets and conducting international business functions have been revolutionized by the advances in Information Communication Technology (ICT) sector [2] [6] [1].
Like any other country that considerably leverage on information technology, there is a need for China look into information security factors. The country is faced with an increase in cyber-attacks and threats from other countries. Another key technological issue in China is that the banking industry does not have stable and safe online payment system. There are uncertainties and avoidance with Chinese buyers. The Chinese credit card penetration is very low due to buyer avoidance. Online payments are vital for effective business transactions. This should one of the key considerations when investing in China [1].
7.3.5 Legal analysis
Different countries’ Legal systems differ by interpretation and content. A company venturing into international markets is not only bound by its home and host country laws and but also by a number of international legislations. How a product is accepted in a country can be impacted by regulations on things such as packaging and by legislation changes. The legal setting in global marketing is complex than in local markets since it is three dimensional: (1) local domestic law in host country; (2) international law; (3) domestic law in the company’s home country. In the past China earned a bad reputation for allowing breaches of copyright and flagrant piracy. However, this has since change, though there is still an element of this practice [1] [2] [12].
7.2 SWOT analysis
SWOT Analysis (figure 5) is a strategic planning tool utilised to assess the Strengths, Weaknesses, Opportunities, and Threats that can be encountered in any business undertaking. It details the objectives of the business undertaking and it identifies the internal and external aspects that are positive and negative in achieving the objective [6] [1].
SWOT Analysis sets key elements into two main groups:
1. Internal Factors — Strengths and weaknesses internal to the company.
2. External Factors — Opportunities and threats from the external environment to the company.

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