Global Marketing: China

MKT 568

Socioeconomic Analysis Report: China

Handed into Dr. Miller

Nicholas Ksiezopolski

3/6/2008

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China is one of the oldest continuous civilizations, and subsequently it has reaped the benefits of having such an enriching ambiance to culture some of the world’s greatest inventions known to man. China has been at the forefront of paper production, the ever important compass, the printing press and gunpowder. But even with these successes in the past, China has been ever present in a plethora of civil and cross cultural wars. Even with the tumultuous past of China, China was able to be the largest economy for 18 of the last 20 centuries and until the 15 century had the highest per capita income (Economic System). China is a vast and multifaceted country that has a diverse and intricate socioeconomic system. These values breed a restriction of economic freedom that is slowly deteriorating. From these socioeconomic factors arise a multitude of opportunities and threats that China needs to capitalize on or improve to see monitored progress. As a special mention, there are varying opportunities and threats that come from specific beer consumption data. These external factors will be dissected and applied to the Chinese economic landscape.

In 1949 the People’s Republic of China (PRC) was formed but before this political change of pace, China was a weakened giant with a pronounced emphasis on agricultural commodities such as cotton, grain and yarn. This was the foundation on which China rebuilt and anchored the economic development of new China. Since 1949 China has undergone a large-scale economic reconstruction. The infrastructure has slowly been implemented by installing nine five-year plans since 1949. These short term goals have all resulted in a momentum of marked achievement. They opened the door for reform and “opening up” in 1979 (Economic System). China’s economy has grown by leaps and bounds since the inception of openness and is now seen as the newest player on the economic trade field in the ever globalized world.

In 1992 the PRC produced a strategy to establish a market economy. According to the official documents the central aspects of the structural reform are “the development of diversified economic elements will be encouraged while keeping the public sector of the economy in the dominant position (Economic System).” The market economy forced state-owned companies to change and evolve to fit into the modern enterprise system. The new market system had a pronounced impact on linking the markets of both rural plains and urban sprawls as well as on a macro scale of connecting the domestic and international markets of China. The integral difference between post and pre 1992 is the conceptualization of having an economic system devoid of direct government regulation and entertain a complete macro-control system by indirect subtle means.

In 1997 the emphasis of China turned to non-public sectors. China stressed the profitability of these sectors to help highlight the importance of production elements. These elements, which include technology and capital, are keys to the restructuring of China’s economy and have helped China take giant strides forward down the road of bullish economic utopia. By 2001 the majority of integral reforms were in place and a socialist market economy was on its way to being established. The ever evolving socialist market economy has now expanded to include constitutional amendments like property rights and income distribution which affects and improves education, medical care and social security. In the last 10 years China’s economy has grown an average of 10% per annum. China has become the third largest trader in the world with a staggering 1.76 trillion in the fiscal year of 2007 (The World Bank Group). China may have come a long way since 1949 and should be commended for forward thinking and innovative economic strategy but in the last year alone there were nearly 300 million people (roughly the size of the US population) still living in poverty. They are living on less than a dollar a day and 47% of the Chinese population is living on $2 a day.

China’s economy is 52.8% free according to The Heritage Foundation assessment in 2008, this distinction ranks China 126th in the world for freest economies. China ranks 23 out of 30 for countries in the Asia-Pacific region and its overall score is slightly less than the regional average (Index of Economic Freedom). When taking a closer look at the ranking, China scores well in government expenditures and equals the world average in trade freedom, monetary freedom and labor freedom. However China severely restricts freedoms in investment, financial decisions and property rights (Index of Economic Freedom). Foreign investment is highly controlled and regulated to protect China’s social market economy. To make matters worse, the only avenue to help remedy this problem is the judicial and governmental systems. But the judicial system is exceedingly politicized and China’s is organized by a one-party state ruled by the Chinese Communist Party.

Within every culture and country there are certain socioeconomic traits and trends that can be seen as opportunistic or threatening. China is no different and when looking at some of China’s hard data, one can see a glaring threat to increasing China’s expanding economy. A strong free market system is founded on a free flow of information between all parties involved. Some of the most elementary arenas for information sharing include the internet, TV subscriptions or even just the ability to use mobile phones. China has depleted avenues for media and information sharing. It starts with a tri-fecta of socioeconomic traits. China only has 85 out of 1000 people be able to access the internet, a staggering low number for a country that wants to be seen as a major player on the global trading stage. China has only 302 out of 1000 people using mobile phones and China has 89% of the population watching censored state sponsored TV (The World Bank Group). These are threats to China’s growing economy because if the general populous cannot get on the internet or watch uncensored TV- true uncensored and unbiased sources of information then all decisions of the general assembly will be made by governmentally sanctioned media outlets. For China to truly flourish in a free market system, it must have an open arena of communication