- Last year it was reported that John Lewis were investigating overseas expansion into China. What Political, Economic and Sociocultural factors would it need to consider before making its decision as to whether to open stores in China?
This is a well-known fact that John Lewis chain of stores occupies a leading position in Britain consumer’s minds. Company has a special partnership model, thus, the economic strategy is functioning according to certain frames. Properly adjusted, more caring capitalism structure was supposed to replace the plain one – this was the initial idea of all the company’s structure. The economical, political and sociocultural factors are weighted by this company’s management in order to make a final decision of future investments.
The investment in China was a question precisely discussed in 2012. This was followed with a mission trip to China by Charlie Mayfield in order to find the benefit before making future decision. The country growth and its development rate were the main attractive points during the common meeting on that subject and it was mentioned that the main objective for the firsts period will not be opening stores, but finding good source of needed products to develop strong partnership bonds (Quinn, 2012).
Before making any investments, it is worth to mention that the environment factors must be carefully analysed. Among the most common are political factors, such as VAT growth, tax policy, trade restrictions and environment regulations. The most striking example of the points mentioned before is China’s VAT, which is 17% and this less than in UK, therefore more beneficial for the investor.
Next in our list stands economic component, which is the most marginal indicator taking into consideration a strong decision to invest in the targeted market. This refers to interest rates, level of inflation and exchange rates, working hours, ware rates, credit availability, unemployment rate, etc. The prognosis mentions that China’s economy will be the leading one in 20 years with great potential and further developments. Going back to the idea of the company’s structure the fact that capitalism capacities continue to develop in China has a positive impact on the future decision. It is also a common fact that this country is one of the world’s four officially remaining socialism states that follows communism. Let us try to mention what is good about that. First of all, unlike in some other countries, the Communist party in China did a lot of improvements related to stabilizing the socio-cultural atmosphere in the country, as an example one of them is related to women position in the society (Schulz, 2012). No need to mention about The Great Forward, which helped this country to gain a strong position in the market as the most industrialized country.
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People are also very important economic factor. The John Lewis Company itself is owned by its 76,500 workers. Everywhere in the world government looks more favourably at the business once it is owned by workers. The strategy of shares requested by stuff in a broad manner is a leading point (Economist.com, 2012). This leads to a conclusion that people are very important to John Lewis Company. China has both world’s fastest gowning economy and the largest population. Mobility of employees is another feature that is worth mentioning. The market in China is open for new developments, new investors and contains a variety of multifunctional companies that are willing to create strong partnership with external companies.
All those things describe China as a country with an unlimited potential, great future and best field for investments.