China Pestel

Topics: Organic food, Sole proprietorship, Corporate tax Pages: 6 (1519 words) Published: November 24, 2010
PESTEL Analysis
1. Political Factors
Peace and development are the main topics of world; China keeps stable and harmonious relationships with all of countries.

Government Encourages Entrepreneurship
The government encourages the citizen to create the enterprise and cooperate with foreign-funded enterprises; it is a good opportunity for all of people and develops a new business. Such as preferential policies for setting up business, decrease the sales tax and income tax, offer free training course for high school graduate or unemployment, no individual guarantee for the enterprise loan below 70000 Yuan and etc.

Decreasing in Import Tax
One good thing for our business are the import tax of cream material goes down from 19% to 6%, moreover we have more choices to select the ice cream machines, and it will reduce our cost and make the produce process easier.

Impact on Open Economic Policy
Albeit the competition will be strong as the foreign brands swarm into Chinese market this few years, we discover that there is still a gap for our business to fit in and it is also a chance to develop the Chinese brands and enhance the existing ice cream industry to compete with foreign brands. On the other hand, it lays a foundation for Chinese ice cream brands enter into the international market in the future.

QS Standards Certificate
Ice cream industry QS (Quality safety) standards certificate is a passport for running ice cream factory. It requires every factory to prepare a freezer which can keep the ice cream under the degree 30; the freezer will cost 5 million Yuan. But this rule doesn’t apply to the foreign ice cream brands and some of home-made ice cream shops.

Tax Policy
It depends on the place and general industry sales amount, the tax department estimates the sales amount of the store, and then we need to pay for 5.45% tax every month. There is no relationship with the invoice.

Employment Policy
For employments, they must have health certificates. The enterprise must sign the contracts with them and pay the four insurances which the government asked for. Include the old-age insurance, medicare insurance, unemployment insurance, and child-bearing insurance.

Allowance for Farmer Who Plant Organic Products
Organic materials are now more expensive than the average products in the market. Hence, the government supports and encourages the farmer to plant the green and organic agricultural products. We believe that the price will go down, and people will enjoy the green and organic products more than before.

2. Economic Factors
2.1Macro economic factors
Growth in Population
In shanghai, the area covers 6340km², separate 18 districts. the population is about19 million and 6million families. The best business area is Xuhui (1060,000 population), Huangpu (570,000population) and Pudon district (2400,000 population). The high density of population will have a positive impact to our business.

GNP Trends and National income
According to the first quarter reports of this year, national economy maintain a growing trend, achieved 657.45 billion Yuan which rise 6.1% compare to last year. The per-capita disposable income of urban residents is 15781 Yuan and the per-capita net income of rural people is 4761 Yuan, rise 8.4% and 8% in real terms. It is estimated that the growth target for this whole year can be reached 8%.

2.2 Micro economic factors
Based on the first quarter report of this year in Shanghai, The disposable income per-capita of urban residents is 26690 Yuan and the per-capita net income of rural people is 11400 Yuan, rise 6% and 6.5% in real terms.

According to the report of The People's Bank of China in May 2009, the saving breakthrough 4 trillion, growth rate meets 23% and the amount rise 48.3billion Yuan. House rent income and other property income rise 2%.

Employment pressure keeps increasing trend, the university graduate is 158000, rise 6%. The government pushes many of policies...

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