The People’s Republic of China simply known as China is located in East Asia with a population of around 1.404 billion. It is a multi-ethnic nation with the Han nationality as the principle country. China is a developing economy that offers lot of market opportunities for foreign investment. Despite the fact that the nation has an enormous potential for economic growth offering access to a large market and considerable savings in labour costs, caution must be used due to differences in the political and cultural environment that create risk and pose uncertainty for foreign investors. Since the economic reform occurred in 1978, China has created on the worldwide stage as a rapid- growing power house in Southeast Asia. The different ethnic groups within China’s territory are collectively referred to as the Chinese nation which are The Great Wall, Dragon tattoo, Panda is one of important symbols of the Chinese nation. Moreover, Confucianism, Taoism, Tai-Chi, Fengshui, Kung Fu are originated from China. (Topchinatravel.com, 2018)
Apart from that, tourism in China has grown quickly throughout the previous couple of decades, since the open policy had been actualized in 1978. The glorious ancient architectures, the splendid landscapes, the hospitable Chinese people, these influence the tourism business to thrive in the previous couple of decades. The emergence of a newly rich middle class and an easing of restrictions on movement by the Chinese authorities are both fuelling this travel boom. China has turned out to be one of the world’s most-viewed and most sweltering outbound tourist market. Not to be neglect, China has revitalized a large number of wonderful attractions such as antique sites and relics, imposing imperial palaces, delicate water towns, amazing natural wonders, splendid cultural heritage, and diversified folk customs. Also, the domestic and international transportation also has improved greatly that it is simpler for tourists to travel to China. (Topchinatravel.com, 2018)
2.0 Business Tourism (MICE)
Business travel for MICE activity comprises 42 percent of total domestic business travel volume in China and accounts for 45 percent of total business travel spending. Shanghai and Beijing hosted the majority of MICE trips in China over the last 12 months, followed by Macau, Guangzhou and Hong Kong.
Above graph has explained why major international hotel chains in China, despite the country’s economic slowdown are ramping up expansion plans to cater to the growing Chinese MICE demand. Under the context of the hospitality industry, the conference and event sector is a rising star which is assessed to develop at a rate of 20% every year. In the year of 2014, China MICE Buyers Report found that the majority of Chinese event planners foresee there would be more meetings in the coming year, in spite of the fact that these are probably going to be shorter and more cost-proficient because of the Chinese government’s productivity measures. Indeed, Chinese cities such as Wuhan, Tianjin and Chengdu are building convention centres, hotels and other venues to keep up with growing domestic and international demand for meetings in China.
Nevertheless, there are numerous barriers to have a sustainable MICE market in China. Firstly, rapid development and urbanization make it hard to invest in services that may not restore a prompt benefit. Besides, there are cultural practices and attitudes that neutralize the possibility of reduction and reuse and there is infrastructure restriction that make it tough to follow sustainable best practices. For instance, limited recycling and composting opportunities. Nonetheless, because the hospitality industry is moderately youthful and developing, China has an opportunity to play a role of leadership in green MICE by building and operating more responsibly from the start and by picking up best practices from different nations around the globe. (Growth and Trend of China’s MICE Industry, Marketing China, 2018)
As a result of the growth of China’s MICE industry there is a need for increasing in professionals with training and skills in business travel and events. In the year of 2014, CIBTM Venue Trends survey, almost 80% of venue managers revealed that they would make more prominent interest in staff training, particularly in the areas of event services and sales, in order to better compete for holding meetings and get more event revenue.
3.0 PEST Factor
3.1 Political factors
Given that political and monetary distress have been so across the board this year, it should come as no surprise that there are political rumblings in the Middle Kingdom. China, the world’s most crowded state, is watching its exports to the U.S. and Europe fall for the first time since it turned into exporting powerhouse. Even as demand for its goods declines from the developed world, its expenses for producing those products has started to climb. Yet at the same time issues such as managing environmental degradation, demographic pressure and the extreme immigration from rural to urban area must be looked by the government. In the year of 2011, it is possible that this will end up being history’s greatest year of political change and unpredictability. The domino impact that started with the Tunisia uprising rapidly spread all through the Middle East to a group that includes Egypt, Libya, Sudan, Syria, and Yemen. The fabric of the European Union continues to seriously fray at the edges, uncertainty and confusion still reign in Japan following the triple disasters of earthquake, tsunami and nuclear meltdown. Occupy Wall Street and its cohorts have taken over parks, plazas, and cathedral steps around the world, and even the harsh territory of Myanmar has started political reorganization. Designing each part of life is the traditional Chinese way, including where you live, where you work, what you make, and how much you earn. As draconian as the aggregate investigations of the mid-twentieth century were, the most potentially damaging to the economy was not instituted until 1978: the one-child policy. Over thirty years after its institution, this well-intention attempt at population control is turning into a quagmire of unintended outcome. It is responsible for the incipient labour shortages and the demographic aging of the population, with fewer young workers to take the place of, and ultimately support the senior citizens. It is also ultimately accountable for the social unrest that is beginning to permeate much of Chinese society. The younger generations in China now contain statistically far more males than females due to the preference of families that their single child be male.
The Chinese economy experienced staggering growth over last few decades that catapulted the country to become the world’s second largest economy. In the year of 1987 when China began the program of economic reforms the country ranked ninth in nominal gross domestic product (GDP) with USD 214 billion; 35 years later it hopped up to second place with a nominal GDP of USD 9.2 trillion. (FocusEconomics | Economic Forecasts from the World’s Leading Economists, 2018)
Inflation rate is the general rise in prices measured against a standard level of purchasing power. In April 2009, prices dropped 1.5% from last year, after steady falling at the beginning of 2009. Falling prices lower the cost of goods and encourage consumer to spend. This helps the Chinese economy recover its diminishing export. Inflation was at 8.5% which cause the price of pork to increase because the shortage on meat. Food drop 1.3% from a year earlier which represent the biggest part of the index. Non-food prices fell 1.5%, garments dropped 2.5%, service cost dropped 1.4%, and utilities fell 2.2%. Producer prices decreased on lower raw-material and energy cost. Crude oil fell 53.6% which is a significant drop from historical numbers.
The Chinese Central Bank too caution to the hazard, anticipating that costs should diminish further, and delays purchases to diminish demand and stifle economic growth. The government has countered the risk by raising state controlled costs of assets and purchasing farmers’ product to stabilize price. The investment of cash reserve into the economy of 586 billion makes protracted pricing declines less probable. (Usi.edu, 2018)
Figure 1.2: Usi.edu 2018
The above figure has presents data on the annual change of Consumer Price Index (CPI) of China from April 2008 to April 2009 (National Bureau of Statistics, China Report, 2009).
In addition, Chinese Government pursued agricultural reforms, destroying the commune system and introducing a household-based system that provided peasants greater decision-making in agricultural activities. Not to be neglect the government had also stimulated more self-management for state-owned enterprises in order to increased competition in the marketplace and create opportunities for China’s domestic enterprise directly contact with the foreign ones.
China emphasizes on education, and most of the nation are educated. The proficiency rate in China is more than 90%. China considers education as investment in human capital and an intermediary for long haul prospects for financial development. In higher education, based on 2013 QS World University Rankings, China has two in the top 50 university in the world, at places 46 which is the Peking University and 48 the Tsinghua University. Likewise, China sent a record 274,000 students to the US in academic year from 2013 to 2014, more than any other country ever. It might in the long run lead to a stronger academic performance by Chinese universities, as many Chinese students will return to China after their studies in the US, partaking in the Chinese economy and reinforcing the establishments of Chinese Universities. (Anon, 2018)
Technological factors often revolve around the development of new products, new buying mechanism including extranet and intranet. It also entails the design of new production technologies and distribution mechanism as well as mobile communications. (Bremmer 2015, p.40). Chinese science strategists realize China’s greatest opportunities in innovation fields. For instance, computers and biotechnology where makes a shot for China to make development in these zones. There are 420 million web users in the nation. Mobile internet is a driving force behind industry subversion in each business, and interfaces everybody to one another; anything can be shared at no communication cost. Trades through e-commerce can be done freely and effectively. As there is internet access most of the Chinese consumers often shop online. For instance, Taobao is the largest local e-commerce website which most of the shopper spend a great deal of their things from the webpage. E-commerce has changed how local consumers see and do shopping. (Anon, 2018)
China has a developing business sector injected with fast modern advancement and economic growth. As the world’s third largest trading nation after the United States and Germany, China will continue to be a vital business partner of the United States. US business people and organizations must understand the differences in the economic, political, and cultural environment of the country as these can be difficult to manage and may hinder business development. Especially important is to learn about cultural and political differences and their impact on business practices and business conduct. (Usi.edu 2018)