Impact of External Environment to Business in China Essay

IntroductionNowadays, mainland mainland China is experiencing a rapid frugal growth. By following the end of the eleventh National Peoples Congress of Peoples Republic of China recently, China is emphasizing to rear seven impertinent strategic industries with the release of the Twelfth Five-Year Program. As China is achieving a low carbon economy, thus matchless of the impudently strategic industry, new sinew is essential to the success of achieving the goal. Biomass energy is one of the new energy which generates electricity and biodiesel by burning country straw, fruit, wood and animals blow out (1). The following allow for be the summary of Macro-environments for the China Light and Power Company Limited to degrade the China market, and suggestions depart be addicted at the end of the analysis.Company BackgroundChampway Technology Limited is the only company who possesses an Environmental give up to recycle waste cooking oil in Hong Kong. Its primary objective is to recycle all local waste cooking oil and organic oil and grease into biodiesel. It contribute to save the environment by aiming at recycling all waste cooking oil in Hong Kong and stem the trend of re-using waste oil on the dinner table. It also committed to produce high quality biodiesel which is a slap-up and efficient fuel by using the collected waste oil (2).Macro-environmentAs China is a highly distinctive market, once foreign-invested enterprises want to enter the China market, there must be stickyies to be faced. However, there atomic sub payable 18 still some favorable factors while they ar entering such market, and they lead be analyzed as follows.There are quaternion macro-environments for Champway to enter the China market. Firstly, the Champway may win from the governmental and legal environment of China. During the release of the seven new strategic industries in the Twelfth Five-Year Program, the profound government has put so much emphasis on the growing o f new energy, especially the development of biomass energy (3). Also, the State Forestry Administration has decided to reserve two hundred million acreage of quality land, for cultivating the plants that specifically for the extraction of biodiesel (4). As a result, the mathematical process of Champway in China tin benefit from the immobile support and back up by the central government when entering the China marketing with biomass energy.Secondly, the Champway may benefit from the economic environment of China. As mentioned, China is experiencing a rapid economic growth with a GPD growth of 10.3 percent in January of 2011 (5). At the same time, Renminbi keeps appreciating against US dollar and Hong Kong dollar (6). As a result, the Champway may benefit from appreciating Renminbi, since Champway is operating business and selling energy for Renminbi in China. So the actual lever of the profit gained is also appreciating. Moreover, refer to a speech of the Labor Department, the n umber of masses seeking unemployment benefits travel by 26,000 to a seasonally adjusted 397,000 recently (7). This implies that the unemployment rate in China is rising. Thus Champway toilet also benefit from this circumstance as it can hire sufficient work people for their operation in China.Thirdly, the Champway may benefit from the social environment of China. As people in mainland China decease more educated and more environmental conscious (8). They are more equally to support products with environmental friendly features like biodiesel. As a result, the Champway may catch this opportunity to market biodiesel and benefit from the change magnitude demand for biodiesel.Fourthly, the Champway may benefit from the ecological environment. China is rich in raw materials. However, most of them are not explicated yet (9). With a great depletion of raw material, it is insufficient to support the energy consumption of or so 1.3 billion population. As a result, biodiesel is acting as a perfect substitute of raw materials like petroleum. So Champway may take the chance to market biodiesel and benefit from the great demand it.DifficultyAs mentioned, there must be some difficulties when entering such distinctive market. So here is the give-and-take of those difficulties.There are four difficulties to be faced when the Champway is entering the China market. Firstly, the Champway has to face an unfavorable political and legal factor. As the central government is deciding to even the income distribution in China, a new labor protection policy of minimum wage will be established (10). This policy will development the wage level of workers. As a result, it is unfavorable to Champway, since Champway has to hire a great number of workers for building and operating the facilities of energy generation in China, and the increased wage level of workers may leads to an increase in the operation cost. So it is more difficult for Champway to survive in this sector.Secondly, the Champway has to face an unfavorable economic factor. As the increase popularity of biomass energy in China, agricultural product will become more valuable, since agricultural product is one of the inputs of biomass energy generation. Also, the market price of agricultural product has increased due to the inflation. As a result, the operation cost for Champway to run the business in China increases and it may be difficult for Champway to survive with this industry in China.Thirdly, the Champway has to face an unfavorable social factor. Although the central government has emphasized to develop biomass energy, there is still no clear and definite guideline for supply of input and quality standardised (11). Also, there is an unethical business culture exists in the China society due to the lack of soundly education. As a result, there is a disorder in the biodiesel market. People are pretending the veritable biodiesel with a fake one (11). This phenomenon may create an unhealthy image for the industry and the industry will be negatively affected.Fourthly, the Champway has to face an unfavorable ecological factor. China is one of the most suffered countries in term of natural disaster. According to the statistical figure from the United Nations, in the year 2008, China has the world superior loss of 110 billion due to natural disasters, which is 60 % of the loss of the whole world (12). So there is a frequent lost of agriculture exists. As a result, there will be an unstable supply of input for the biomass energy generation, and the company may unable to survive in China market with this industry.SuggestionAfter the discussion of the unfavorable factors for Champway to enter the China market, some suggestions will be given to outperform the difficulties as follows.Here are three suggestions that Champway can apply to overcome those difficulties. Firstly, in order to overcome the unfavorable minimum wage and increasing market price of agricultural produc t, Champway is recommended to enter the China market through equity joint venture with a greatly financed or a state-owned biomass energy company like the Everbright International (13). So that it can spread and share the costs and risks with its partner. As a result, the difficulty of high operation cost can be overcome.Secondly, in order to overcome the unfavorable counterfeit, Champway is recommended to deal with the problem with a well designed distribution and place of the biodiesel. The company can develop and sell its original biodiesel through biodiesel filling station or biodiesel specialty store. So that people can easily recognize the genuine one and avoid buying the fake. This action can ameliorate the company image by building confidence for customer to consume our product.Thirdly, in order to overcome the unfavorable unstable supply of biomass. Champway is recommended to deal with the problem with the use of multiple suppliers from different region in China. Since Chi na is a huge land, natural disasters often occur only in a cross area. So by using multiple suppliers from different region, the company can immediately seek for supplies from different suppliers in other region, when some of them are unable to supply the company due to natural disaster. culminationTo concluded that, Champway can benefit from four macro-environments when entering the China market. They are political-legal environment, which is the support and back up by the central government economic environment, which is the appreciation of Renminbi and the large supply of labor social environment, which is the increasing environmental consciousness and ecological environment, which is the great depletion of raw material and the great demand for substitutes.However, Champway has to face four difficulties too. They are the minimum wage, the increasing market price of agricultural product, the counterfeit biodiesel and the unstable supply of biomass due to natural disasters. In or der to overcome the four difficulties, three suggestions are given as the solution. They are the use of joint venture, the development of biodiesel filling station and biodiesel specialty store, and the use of multiple suppliers from different region.