Fiji Water in China: Chinese Market Environment

Population

1,343,239,923 (July 2012 est.)

Age structure

0-14 years: 17.4% (male 125,528,983/female 107,668,285)

15-24 years: 16.1% (male 113,504,233/female 102,285,206)

25-54 years: 46.5% (male 319,710,444/female 305,378,723)

55-64 years: 10.9% (male 74,447,204/female 72,451,831)

65 years and over: 9.1% (male 58,677,903/female 63,587,111) (2012 est.)

Urbanization

urban population: 47% of total population (2010)

rate of urbanization: 2.3% annual rate of change (2010-15 est.)

Major cities - population

Shanghai 16.575 million; BEIJING (capital) 12.214 million; Chongqing 9.401 million; Shenzhen 9.005 million; Guangzhou 8.884 million (2009)

Sanitation facility access

improved:

urban: 58% of population

rural: 52% of population

total: 55% of population

unimproved:

urban: 42% of population

rural: 48% of population

total: 45% of population

Major infectious diseases

degree of risk: intermediate

food or waterborne diseases: bacterial diarrhea, hepatitis A, and typhoid fever

vectorborne diseases: Japanese encephalitis and dengue fever

soil contact disease: hantaviral hemorrhagic fever with renal syndrome (HFRS)

note: highly pathogenic H5N1 avian influenza has been identified in this country; it poses a negligible risk with extremely rare cases possible among US citizens who have close contact with birds (2009)

Political and Economic Environment

Emerging markets are characterized by: poor infrastructure, lack of reliable market data, weak distribution systems, poor communications, lack of regulatory discipline, and tendency for regulations to change. These are all characteristics of China’s market and economy. China’s government is emphasizing a “go west” policy and is opening the interior to foreign companies. However, incomes, infrastructure and logistics all play a role in the unlikeliness that China will create a national brand.

There is a lot of history behind the political climate in China. It is imperative to have political change if there is any chance of changing the planned economy to a market economy.
Price stability is another challenge in the Chinese economy.
“The reality in China is that the bedrock of social policy is in effect economic growth, and growth in China is fired by competitive dynamism of its provinces, local governments and cities.”
The volatile market environment is not a new phenomenon. The market place changes at a rapid pace with issues such as increased competition and tightening regulations. However China and its business environment is evolving quickly.

The government is authoritarian and democracy is not in effect. The government is strong and the civilians have limited individual rights; however, over the past couple of decades this is beginning to change. China is trying to balance how much the state manages the national economy; meaning more privately owned businesses have been emerging.

The goal of China’s economy is to become a market-driven economy. To do this China has successfully combined state intervention with private investment and all within a communist form of government. this is also referred to as a “socialist economy with Chinese characteristics.” (https://new.edu)
The questions that arise from emerging businesses include: privacy, individual rights, and intellectual rights protections. (https://new.edu)
This type of economy has tilted favor towards Chinese companies who understand how to navigate this system (https://new.edu)
China is the only communist party-led state in the G-20 grouping of major economies
The communist party dominates state and society in China, and is committed to maintaining a monopololistic power. China is intolerant of those who question its rule.
There is a perception that China has “hardened” its attitude to the outside world, and they blame the US for creating a global crisis; therefore, they favor local companies over foreign ones.
Although China began freeing its economy in 1978, it has “wielded a strong hand” over business in an effort to maintain political and economic stability.
The government still prevents foreign companies from entering core sector markets.

Labor Climate

Population is 1.344 billion
According to the National Bureau of Statistics, China's employment stood at 774.8 million persons at the end of 2008.
306.54 million individuals, accounting for around 40% of the workforce, were employed in converting natural resources into primary products, which are used as raw materials for other industries.
211 million individuals, accounting for around 27% of the workforce, were employed creating finished, usable products.
257 million individuals, accounting for 33% of the workforce, were employed in the service industry.

Management Climate

Employee turnover rate is as high as 19% in some studies.
Western countries have an average turnover rate of around 5%.
Competitors will offer double an employee's salary to move, so retention is very difficult.
An older person automatically receives respect from younger people.
Senior management gives instructions to their direct reports and who then pass down the directions to others.
Managers are seen as fatherly like figures who receive loyalty and obedience from employees.
In return, the manager is expected to take a genuine interest in the well-being of their employees.
Senior managers have close relationships with Chinese government officials, and all business decisions will be scrutinized by the Communist Party which is a hidden motivating force.
China has a lack of good-quality, experienced upper level managers. This is typical of a rapidly growing economy. Good managers are extremely expensive, so recruitment and retention is difficult.