Pestel Analysis: Politics and Laws

PESTEL ANALYSIS
POLITICS AND LAWS

 Economic and cultural institutions in China, the Communist Party Committees work to
ensure party and state policy guidance is followed and that non-party members do not create
autonomous organizations that could challenge party rule.
 China usually requires many specific implementation rules and measures. However,
vagueness allows Chinese courts and officials to apply them flexibly resulting in
inconsistencies.
 Agencies at all levels of government have rulemaking authority, resulting in regulations that
are frequently contradictory despite China's commitment to ensure that these measures
conform to its WTO obligations.
 Since Deng Xiaoping’s open market reforms, the growth of new business has outpaced the
government’s ability to regulate them.
 Intellectual property protection in China is very weak compared to North America. Since
joining the WTO, China has strengthened its legal framework and amended its Intellectual
Property Regulation (IPR) and related laws and regulations to comply with the WTO
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).
THREATS
o It is not easy to start a new fashion brand business in China because our business must pass
scrutiny and obtain a permit from the government. Since there are many strict and complex
rules for multinational companies, it is easy to be refused entrance into the China market.
o Because of the regulations that are frequently contradictory Companies often have difficulty
determining precisely whether their activities comply with or contradict a particular
regulation.
o The growth of new business has outpaced the government’s ability to regulate them has
created a situation in which businesses faced with mounting competition and poor oversight
will take drastic measures to increase profit margins, often at the expense of consumer
safety.
o Legitimate businesses are more likely to lose profit due to piracy.
o Customers may not be differentiating between the real and counterfeit products, resulting in
a perception of low quality. This damage the enterprise or brand image.
OPPORTUNITIES
o There are many rules regarding businesses even though it creates some hardships while
entering the Chinese market, we can use those regulations to take necessary actions
regarding the safety of our business.
o Chinese government has many trade agreements with other countries so it will be easier to
get the materials for a fair price for our business.
o Chinese government provide great infrastructure facilities to the business.
STRATEGIES
 We can be respectful to their policies and grant access to the market by agreeing to provide
job opportunities for the Chinese labor force.
 There was a threat of competition of other businesses trying to get high profits without
considering about the consumer. We can turn this around by producing consumer friendly
products.
 Our company will have to take necessary legal actions to protect our brand image and
protect the company from piracy.
SOCIAL
OPPORTUNITIES
 Chinese people do not turn to foreign markets.
 Widespread change in the tastes of the Chinese people
 Being the largest market sender
 All age groups are in the market (preschool, school-age children, teens, young adults
age 25 to 40, middle-aged adults age 40 to 65, and older adults age 65 and up)
THREATS
 Changing languages used in China and America.
 Impact on gender and productivity
 Despite the disparities in the distribution of income of the people
 Young people are turning to new and popular products.
 Make the most of the opportunities and the threats to the organization can be
addressed as follows.
 Considering the anomalies in the distribution of income of the people Use of
common language in the workplace.
 Making products according to population distribution
 and producing accordingly
 New and popular products should be introduced to the market and efforts
should be made to retain the youth in the market.
TECHNOLOGY
When starting a new business, there are technological opportunities as well as threats.
OPPORTUNITIES
 Ability to use high power and building technological opportunities due to the pursuit of
innovation.
 Being able to identify technology coming from foreign countries.
 We can take advantage of the by-products of new products.
 To be able to increase the competitiveness of the country by manufacturing goods and
services using technology from China as well as from other foreign countries.
THREATS
 The introduction of new products leads to the depreciation of technological tools and high
costs.
 A modified technological product is not superior to a competitive market.
 Exchanging technical tools can lead to huge costs as technical issues arise.
 Technological strategies used to produce goods and services were selected.
STRATEGIES
Business success can be achieved by identifying opportunities and threats that arise when starting or
expanding a business and finding solutions to its threats. It is therefore possible to avoid these
threats by training employees to make these technological changes and by using high quality raw
materials and maintaining technical tools properly.
ECONOMIC & ENVIRONMENT
ECONOMIC FACTORS
China is the second largest apparel market in the world taking up 18.4% of the total market
worth of $ 1.773 billion USD. And while starting up a fashion business in China economic
and environmental factors impact and affect significantly. Interest rate In China average
4.53% from 2013 until 2021 Meanwhile Chinese government issued a negative interest rate
for first time in in a bond sale that attracts significant investor interest. GDP of China is 14.35
trillion in 2019 and 2020 the growth of real gross domestic product in China amounted to 2.3
% and china becomes only major economy to avoid Covid 19 recession in 2020.
ENVIRONMENT FACTORS
When it comes to environmental factor China is very much concerned on all industry to
adhere the environmental laws Due to pollution caused by textile and garment industry from
producing and distributing the crops, fiber used in fashion contributing to water, air, and soil
pollution. Some of the environmental factors a business should consider are,
Weather law regulating waste management
environmental pollution
Climate changes Recycling
OPPORTUNITIES
 The interest rates are very much likable to business to take as loan and the negative
interest rate schemed loans are very advantageous.
 The rise in GDP means that their target market is gradually growing since it leads to
demand in economy.
 Many Incentives and tax reliefs given by Chinese government who are involved in
export and have shown a growth.
THREATS
 Natural disasters may adversely affect since China has high probability of tsunami
and earthquakes.
 Influence from pressure groups since fashion leaves a great environmental footprint in
supply chain and life cycle.
 Increase in interest rate may cause business working capital and profitability
problems.

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PESTEL ANALYSIS

POLITICS AND LAWS

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