Risks and Dangers of Exporting to China from a New Zealand Point of View

Nitesh D’Souza

0822655

Environmental Analysis

Country: China

Table of Contents:

1.0 Introduction

2.0 Analysis

2.1 Opportunities

- Labor Force

- Economic Health

- Environment

- Tax Benefit

2.2 Dangers

- Bad infrastructure: PepsiCo

- Government Intervention: Google pulls out

- Cultural Issues

- Lack of purchasing power

3.0 Conclusion

4.0 References

5.0 Appendix

1.0 Introduction

Before any risk is taken we would always weigh up the pros and cons before making a decision. The same can be said before investing in a foreign market. Before investing into a foreign country, it is essential that we conduct prior research of that country in relation to your home country (New Zealand). The country we have chosen is China. China has the second largest economy in the world and is a rapidly growing emerging market. In 1978 the Chinese government decided to make a change to their economy. They moved their economy to be more market driven and less planned socialist. This had positive impacts on the growth for the next 30 years. China has an average growth of about 10 to 11 % annually. China is not only said to have one of the biggest labor markets it is also one of the cheapest. This rapid growth along with a cheap labor market makes China a very attractive location for foreign investment. There are several other factors such as environment, tax incentives, consumer spending etc. On the other hand China also poses risks when investing. Risks such as bad infrastructure “out of the city”, too much government intervention, lack of purchasing power and possible cultural problems. . These opportunities and dangers will be analyzed in more detail (Hill, 2009).

2.0 Analysis

3.1 Opportunities

* Labor Force: One of the main reasons for investment is China’s labor market is that China has 1 billion people and is the biggest population in the world. This is represented through their labor market. There is an abundant...