International marketing entry strategy for Cow & Gate in China Essay

International marketing entry strategy for Cow & Gate in China - Essay Example Recognizing that China has huge potential for baby food, C&G aims to enter and market its products in China. An evaluation of the business environment and market potential would help decide international marketing for China. 2.0 PEST Analysis of China 2.1 Political China’s political and social landscape is stable because of decades or opening up of the economy and the reforms that have been brought about. The Communist Party of China (CPC) has improved governance according to the needs of the people. Political stability has been achieved as people were invited to participate in politics (China Daily, 2011). The voices of people have been heard and their interests safeguarded. The Chinese people seek stability, improvement in the standards of living and enhancement of national strength. There are apprehensions whether under new leadership of Xi Jinping decentralization and liberalization would continue unchanged (Huang, 2013). Protests have become the natural form of expression due to lack of direct elections and a string civil society. As such, the provincial leaders take steps they consider appropriate to promote growth and maintain political stability. However, discretionary action is required as force can lead to violence and leniency can encourage protestors to extract even more from the system. The top authorities however, work in the interest of the people. Nevertheless, the nation lacks accountability at the bottom level and this, needs to be changed. 2.2 Economic Economic reforms in the country have been in place since the 1970s when the economy started moving from a centrally planned one to a more market-oriented one. It has opened up the economy to the world and its accession to World Trade Organization further accelerated the process of integration into the world economy. As a result China became the world’s largest exporter in 2010. State-owned enterprises that are considered important to ‘economic security’ are given supp ort. The restructuring of the economy has led to ten-fold increase in GDP which currently stands at $8.26 trillion (CIA, 2013). China was the second largest economy in the world in 2012 but still per capital income is below the world average. In 2005 China revalued its currency and moved to an exchange rate system that references several currencies. Unemployment rate in China is 6.1 percent and inflation rate is 3.2 percent (Sharma, 2012). China has a labour force of 815.3 million as of 2010, of which 43 percent are in the service sector. China’s economy has experienced a strong annual GDP growth rate of ten percent in the past five years (Bharat Book Bureau, 2012). The drivers of growth of the Chinese economy include high rate of savings, abundance of skilled labour, and urban growth. Inward FDI has been a strong driver of economic growth in China. Leading MNCs in every sector have been making inroads in China which has positively impacted the local manufacturers. It encoura ged innovation and consequently led to low-cost production. Economic reforms and simplification of tax laws and FDI procedures have made China a very attractive destination for investment and growth. 2.3 Social China has a population of over 1.3 billion of 16.6 percent are in the age group of 0-14 years. The literacy rate is 92.8 percent and the main religion followed is