BUSINESS ENVIRONMENT

Business environment

Business Environment

Introduction

Selecting a country in which to operate is a major decision since it demands that various factors needs to be looked upon before entering into the market of that country. However, there are various factors which demands to be taken into consideration so that the company is able to compete in that market and above all the company is able to meet its objectives of Profit Maximization (Engermann 2007, pp.71). Investors tends to gauge the idea of investing into a country is heavily depended upon the economic environment of that country. In regard to this paper there are other factors which also need to be considered before a decision can be taken regarding the investment in any country.

However, the support of the government towards the industry is also ranked among the most critical factors which tend to drive the opinion of the investors (Collier 2008, pp. 53). However, in the context of this paper we will be shedding light on some of the factors which shapes up the investor's confidence to invest in the country. In the context of this paper the industry that we will be eyeing is the Textile Industry and the country which needs to be gauged is china. As pointed out earlier that economic conditions and environment plays an important part however they are not the only factor which needs to be considered.

Discussion

Economic Picture

China's Economy has been performing very well since the reforms introduced in 1978. It is important to note that Export is not only factor that had helped significant development of Chinese Economy, but investment has also significantly affected the growth and development of China. China's fixed capital formation jumped from 30% in 1980 to around 47.5% in 2010. In the last few years, vast infrastructural development has taken place. It includes development of roads, housing and factories. The development in Chinese Economy is also evident from the fact that China has been able to achieve high national savings and has sustained for a very high level. China presents great opportunities for investors and entrepreneurs. It has been achieving a continuous growth of double figures in the recent past. This significant development in recent times has lifted many citizens from the problem of poverty. The main factor leading to significant development in the country is attributed to the fact that the growth in the country is followed by an appropriate demand of goods and services that is aiding the development in the country.

The Chinese currency, Yuan has been appreciating, benefiting the economy. It will also create problems for countries such as America, as the trade deficit of America has been increasing due to being a major trading partner of China (Brainard 2007, pp.131). The trade surplus of China declined to $20 billion in August 2010, compared with $28.7 Billion last year. The decline in the trade surplus is attributed to a significant increase in the imports of the country. The imports of the country increased to ...