Introduction of China

China is situated in Asia. China is the largest country by population. Beijing is the

capital city of china. It touches sea waters also. China mostly consists of plains. It

touches the great Himalayas. It neighbors with thirteen countries like Russia, India,

Pakistan are of main importance.

The official religion of china is atheist. Other religions in china are Daoism,

Buddhism, Christian 3%-4% and Muslim 1%-2%.

There are seven languages that are spoken in the country. Mandarin is the language

spoken by the 70% population. While the other six languages are spoken by the

remaining population.

China is an industrial and agricultural country. The products are china are used the

entire world. This is achieved by the small level industrials units. These units are

set up in the houses and produces products at low cost. These products are then

exported. Approximately 39.5% of the labor force is connected with agriculture

and forestry while 27% of the labor force is connected with industry.

China has the largest population in the world. It provides great labor force needed

for any industry. It also has a very lager area which gives it a diversity in the

temperature and culture.

1

PEST Analysis

Political Analysis:

China is communist country but it is transforming into

democratic form of government. There is only one party in china which is

communist party of china. As there is only one party ruling the country so there is

stability in the country which is very necessary for business activities.

The stability in the country attracts foreign investments in the

country. The government also provides different incentives and securities to the

new businesses. For example government can declare certain area tax free and thus

attracting new investors in the country. The laws are a bit complex for the new

investors. But if the new investment Is approved then it will be a successful

business.

Economic Analysis:

China is a very good market for the investors to invest and earn

profits. Both the industry and agriculture sector provides opportunities to the

investors to invest.

The GDP of china is 10.1% which is very strong indication of

the strong economy of china and it is a good indicator for the foreign investment

2

that the economy is growing and the investments would earn profits and businesses

would flourish.

The main reasons for FDI in china are like low labor cost and big

consumer market. But FDI in china has been fluctuating in china. This is due to

difficult procedure of approval of FDI. The following table shows the trend in the

FDI inflow of china. It has been fluctuating but it has been increasing overall

which is a good sign for the investors.

Inflation rate (consumer prices):

The inflation rate in china is 5%. The inflation is very much low and it is in single

figure. The prices of commodities are low in china. And this figure is also a

controlled one.

Central bank discount rate:

2.79% (December 2009)

3

This is a very good sign for the investors as the financing would be easy and funds

can be generated if needed. As the rate is very lower so the expected inflation rate

is also low which means that more employment.

Social Factors:

The population growth of china is high and government is

taking steps to control this growth of the population. The population growth rate of

the country is 0.494%. The 72.1% of the population is 15-64 years which is the

main target population for the businesses.

Technological Factors:

The china is very much advanced in the technology. It

has very huge internet usage.

Internet users:

China has 389 million users of the internet.

Internet hosts:

China has 15.251 million hosts in the country.

China has a very large no. of telephone and mobile phone users.

Telephone lines in use:

313.68 million telephone lines are in use in china.

Mobile users :

4

There are 747 million users of mobile phones in china.

The broadcasting network is controlled by the government in china.

Investment opportunities in China

There are whole a lot of investment opportunities for the FDI. Following are the

different sectors in which investment can be made and profits can be earned.

Real estate

Energy

Information technology

Tourism

Environment

Manufacturing and production

Education and training

Healthcare

Education sector

5