Swot Ipo In China

Swot ipo in china

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China a country located in Eastern Asia is the most populous country in the world. With a population of 1,412,298,946, the country accounts for more than 18.67 % of the total population of the world.

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This makes it a dream come true for marketers and a highly lucrative market for businesses.

With the GDP growing at 6.8 % in the year 2017, China is expected to be one of the fastest growing economies in the year 2018. With a coastline spanning for more than 14,000 km, China also has a rich history of trade and commerce for centuries.

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China which was always perceived as a market to source cheap labour from or for low-cost manufacturing has been surprising the world through its meteoric rise.

Strengths in the SWOT analysis of China Country

Strengths are defined as what each business does best in its gamut of operations which can give it an upper hand over its competitors.

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The following are the strengths of China

  • Government Structure: The Chinese government has been custom designed to govern the 1.4 billion people who reside there. The state and the National People’s Congress are designated as Supreme Powers and the governance is divided primarily amongst four bodies each of which have specific powers designated to them.This makes decision making simple and clear in the region.
  • GDP Growth: The GDP of China has been on a growth spree for the past few years and on 2017 the growth rate is at 6.8 % which is expected to be the highest after the year 2010.

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    It is also to be noted that the growth rate has crossed the government’s target of 6.5 %.

  • Telecommunication boom: China has seen a boom in the telecom sector with a sharp increase in the number of mobile subscriptions.

    Most of the extensive GSM service networks across the region has now migrated to third-generation (3G) networks.

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    There has also been a steady increase in the mobile phone usage in inland and rural China.

  • Cash reserves: In the year 2016, China registered foreign cash reserves to the tune of USD 3.1 trillion which is the highest in the world.

    This increases the country’s economic prospects profusely.

  • Cheap Labor: China because of its huge population not just offers cheap labor but also a huge potential market for employment.

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    This makes it lucrative for companies who are on the lookout for setting up manufacturing facilities.

Weaknesses in the SWOT analysis of China Country

Weaknesses are used to refer to areas where the business or the brandneeds improvement.

Some of the key weaknesses of China include:

  • High unemployment rate: China has a population of 1.4 billion which is the highest in the world and the employment rate is 71 %.

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    With agriculture sector facing a setback the employment rate in rural China is likely to suffer and more and more people will be dependent on the service sector for employment.

  • Undercapitalized banks: A recent study done by International Monetary Fund indicates that the banks in China are undercapitalized.

    A stress test undertaken as part of the study indicates that the banks in the region would be encountering a capital shortfall that is equal to 2.5 percent of China’s gross domestic product coming to roughly $280 billion in 2016.

  • Restrictions in property sale: Many local governments have imposed restrictions on the sale of property and mortgage lending from the year 2016.

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    This has resulted in slowing down the sale of residential units and also created a slowdown in the construction business with the result that related sectors like steel and other construction material are also negatively impacted.

Opportunities in the SWOT analysis of China Country

Opportunities refer to those avenues in the environment that surrounds the business on which it can capitalize to increase its returns.

Some of the opportunities include :

  • Focus on urban migration: Agriculture which was one of the prime sources of income for rural China has declined with the result that many people are migrating to cities. Statistical records released by the government, indicate that the number of migrant workers has reached 277.47 million in 2015, Around 55.2 percent of this number are people below 40 years old, while 17.9 percent were more than 50 years.

    This creates a huge market for businesses in urban China.

  • Focus on service sector: After agriculture and manufacturing both of which were the primary focus of the Chinese economy have suffered setbacks, the current focus is on the service sector.Considering the huge population of the region this can prove to be a lucrative opportunity for service businesses.

Threats in the SWOT analysis of China Country

Threats are those factors in the environment which can be detrimental to the growth of the business.

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Some of the threats include:

  • East China Sea Dispute: China, Japan, and South Korea have been at loggerheads with each other regarding their economic zones in the East China Sea. This is creating hassles for trade and commerce in all the three countries.
  • Negative perceptions on China: The closed nature of the Chinese government, their growing economic might and the high population rate has all created a negative image of China amongst other cultures of the world.