Investigate of Chinese Auto Mobile Industry -- a Study of Shanghai Volkswagen Case
Part 1 External Environment Analysis
Macro Environment Analysis – PEST Analysis
Political/legislative
Chinese began to open its market and reduces of governmental control over marketing and labour mobility in the1980s. After twenty year reform of state-ownership enterprises the SOEs remained the most significant role in China economy and control the key industry of China. The adjustment of government policy and stabile political environment played a role in the recent increase of foreign investment in China. By the end of June 1997, it was reported that over 200,000 business joint ventures had been registered in China, with a total foreign investment of $204 billion ($15.7 billion from US companies) (China National Statistics Bureau, 1997). Chinese government was full support the automobile industry and regards this industry as the ‘pillar’ industry of the nationally economy. But increased restrictions on foreign exchange and set up high tariff barrier for foreign investment. In addition China’s entry into the WTO would dramatically alter the competitive landscape on one hand and also lower the tariffs on the other hand.
Economical
China is a developing country, after economic reform started in the early 1980s, China 's economic system has been in a transition period from an "old" centralized planning economy to a more open and decentralized market economy. China’s Gross Domestic Products (GDP) growth rapidly with an average 8% raise per year and seem will maintain its high-speed increase in the future. At the same time individual income gain fast growth particularly in some eastern coastal city like Shanghai (see Appendix 1,2). A top economical official predict: “China’s gross domestic product will maintain its 7 percent growing speed in the future” (Yang, 1998).
Social/Culture
Labour Market: China 's abundant labor resource has provided a great amount of labors at a relatively very low cost to foreign multinational corporations
Macro Environment Analysis – PEST Analysis
Political/legislative
Chinese began to open its market and reduces of governmental control over marketing and labour mobility in the1980s. After twenty year reform of state-ownership enterprises the SOEs remained the most significant role in China economy and control the key industry of China. The adjustment of government policy and stabile political environment played a role in the recent increase of foreign investment in China. By the end of June 1997, it was reported that over 200,000 business joint ventures had been registered in China, with a total foreign investment of $204 billion ($15.7 billion from US companies) (China National Statistics Bureau, 1997). Chinese government was full support the automobile industry and regards this industry as the ‘pillar’ industry of the nationally economy. But increased restrictions on foreign exchange and set up high tariff barrier for foreign investment. In addition China’s entry into the WTO would dramatically alter the competitive landscape on one hand and also lower the tariffs on the other hand.
Economical
China is a developing country, after economic reform started in the early 1980s, China 's economic system has been in a transition period from an "old" centralized planning economy to a more open and decentralized market economy. China’s Gross Domestic Products (GDP) growth rapidly with an average 8% raise per year and seem will maintain its high-speed increase in the future. At the same time individual income gain fast growth particularly in some eastern coastal city like Shanghai (see Appendix 1,2). A top economical official predict: “China’s gross domestic product will maintain its 7 percent growing speed in the future” (Yang, 1998).
Social/Culture
Labour Market: China 's abundant labor resource has provided a great amount of labors at a relatively very low cost to foreign multinational corporations