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PESTLE Analysis of China:

Political Factors:
China implement communism in their political system to administrate the country. The
countrys political party in power is called as the Communist Party of China which means
government has every power to control all the activities done. The political stability of
China is quite stable and modest as the involvement of the citizen in politics is low
because of the heavy restriction imposed by the government. The business freedom in
China is pretty strict because of the regulation imposed by the government where they
restrict other businesses coming in. but in recent few years, China government has
initiated the other countries to set up business in China. And that is the reasons China
loosen their trade policy for other countries in their trading, export and import Industry.

Economic Factors:
China is considered as one of the most vital countries in term of economic development
among the world. China has experienced remarkable economic growth at an annual rate
of over 9% during the last two decades. According to the global GDP ranking provided
by the World Bank in 2005, China is now ranked second largest economy in the world
after Japan. China has also become the worlds third largest trading nation and the
second-largest recipient of foreign direct investment (FDI). The government has directly
and indirectly controls their banks and financial institution. Investment done in China are
also regulated because of their judicial system is very weak to the political influence. In
the context of economic globalization, Carpet export, as typical labour strengthened
industry is shifting to some developing countries which have relative foundation and
comparatively low cost. China is one of the most suitable markets, which has more
advantages in market of scale, and other elements of production as low-cost but good
quality labour, land and intelligence. Talking about the tax policies, China has below
mentioned economic data:
Tariff Rate
Income Tax Rate
Corporate Tax Rate
GDP (Billion)
GDP per Capita
Unemployment Rate
Inflation Rate
FDI Inflow (Millions)
Tax burden % GDP
Government Expenditure % GDP
Population (Billion)

3.9
45.0
25.0
7900
5962
4.2
5.9
108300
18.3
19.9
1300
Source from: www.cia.gov
Based on the given data, we can see that China has a fair tax rate and high income tax
rate. Because of fair corporate tax rate, many MNC are attracted to run business in China.

Chinas labour regulations hamper overall employment and productivity growth. The non
salary cost of employing a worker is high. In terms of Carpet Industry, China has huge
labor cost in carpet industry. So Nepali Carpet industry has taken the benefit out of it and
started exporting as China is one of the major exporters of Carpet after USA.

Social Factor:
The potential of the Chinese market is attracting to the foreign companies, however, to
enter into the market is headed by encountering mostly the conflicts from social and
cultural dimensions. As it is known to all that, China is the biggest developing country in
the world with a total population of around 1.3 billion, and 11.9% of the total population
are middle class, which is rapidly increasing to 290 million to 2011. Life styles and trend
in China in many ways such as the level of consumption, attitude toward new product,
changes in the quality of life and also from the quantity satisfaction to quality
satisfaction. Besides that, change in trends has been seen from the degree of fashion sense
where citizen tend to buy more colorful and striking color compared dull colored.
Corruption is another issue in China. According to the Corruption Perceptions Index,
China was positioned 72nd among all 179 countries. However, damages caused by
corruption may be hazardous to the economic development. Corruption has been treated
as a vital barrier for operating in Chinese market due to enormous back-stage
expenditures as well as resulted injustice.
But things are slightly different in Tibet from China in terms of cultural and social
aspects. The remarkable degree to which Tibetans have been able to preserve their culture
is largely due to the depth and breadth of the philosophical basis of their culture. The
intentional preservation of as many aspects as possible of their culture by the refugee
community in India has also been an important factor. Modern Tibetans both in India and
in Chinese Tibet are questioning the validity and applicability of all aspects of their
culture in the present situations. Tibetans in India and Nepal are forced to exist in an
economic and social milieu in which some characteristics of traditional Tibetan culture,
such as their business and trading acumen, are valuable, while others are not. Tibetan
language study suffers from the need for fluency in both Hindi and English. And although
the Tibetan government in exile has been successful in preserving much of its traditional
culture, the exile community suffers from the precariousness of its political situation;
individually they are neither citizens of India nor of Chinese Tibet.

Technological Factor:
After more than ten years effort, China has now built up a modern information network
which covers more than 2000 cities of the country and links to all major international
networks in the world. Through the period, the achievement of science and technology in
China are remarkable where they manage to achieve many discoveries in the field of
Science and technology. Rapid improvement in science and technology also creates more

jobs in very field of technology especially in the manufacturing industry which results in
better and easier quality of life.

Environment Factors:
The government of China is very serious about the protection of environment where they
force many regulations and law in protecting, preventing and controlling industrial
pollution and improving urban environment. The government also collaborates with
many NGOs in order to maintain the nature and environment of the country. Talking
about Tibet, it is a high altitude plateau set amid tall mountain ranges. The mountain
ranges catch the rainfall before it reaches the plateau, so most of Tibet, except for the
southeast, is desert steppe, tundra, or permafrost. Most of Tibet experiences frosts at least
six months of the year, and the highest lakes have ice from October to March. The
weather varies a lot from region to region.

Legal Factors:
China's entry into the World Trade Organization has caused China to undertake a fullscale revision of its laws and regulations in order to adhere to WTO rules. In opening its
market up to sectors involving finance, insurance, telecommunications, commerce,
transportation, construction, tourism, and other services, China will require its judicial
system to perform in accordance with international standards. China regulation of Import
and export trade a number of issues around compliance with GATT / WTO standards. For
import, these include questions about the permissibility of import quotas and potential
application of non tariff barrier. Supported by GATT/WTO, China has pursued a range of
bilateral free trade agreements and China has so far ratified with so many countries.
As per the law of China, There are certain paperwork which needs to done for import and
export as mentioned below:
o Commercial Document
Quotation
Commercial Invoice
Packing List
Inspection Certificate
Insurance Certificate
o Transport Document
Shipping Order
Bill of Lading
Airway Bill / Seaway Bill
HAWB (House Airway Bill)
o Government Document
Certificate of Origin
Import/Export declaration
Import/Export License
International Import/Export Certificate

Custom Invoice