PESTLE stands for Political, Economical, Social, Technological, Legal & Environmental. These are the factors which need to be considered while expanding business nationally or Internationally. PESTLE Analysis is a simple technique which can be used in a fairly sophisticated way, particularly when it is combined with Risk Analysis, SWOT Analysis and expert knowledge about the organisation and its external factors. PESTLE Analysis is normally used to help organisations identify and understand the external environment in which they operate and how it will operate in the future. I believe that a version of PESTLE Analysis can be used by the individual for personal development planning. Here we are using this technique to expand our business Internationally.
Political Overview of China China has been under single party leadership for past 60 years and the leadership has been able to impose its decision on the country without negotiation. China is one of the fastest growing economy in the world.
Trade relationship between Canada & China Trade relation between Canada & China seems to be improved in past few years. In 2003, the import of beef product has been banned from North America because of the disease named as Bovine Spongiform Encephalopathy (BSE). In 2007, the World Organization for Animal Health officially categorized Canada as a “ Controlled risk” country for BSE. On June 24, 2010, an agreement has been signed between Canada & China to allow the market access for Canadian beef.Conclusion: Based on the information above, China seems to be a favorable market for Canadian Beef.
Economical Overview of China The economic growth rate in China is 13.3 percent/annum. China encourage foreign companies to invest in manufacturing & modern services. China ranked second after U.S. in the number of express highway links. One of the drawback of Chinese Economy is that the Unemployment rate in China is increased in 2008 however it is expected to be reduced in 2011
Beef trading impact on Chinese Economy China is the third largest producer of Beef products in the world but still the export of beef is less then 1 percent. Technological progress is not good as compare to developed countries despite the continues growth in beef production. China is facing significant challenges to expand its cattle sector as they are short of grass and foreign resources, breeding stock, water and energy resources.Conclusion: The information above mentioned the current situation of beef industry in China, Which makes it an ideal location for expansion of our business.
Social overview of China Population is one of the biggest problem with China however after adopting the one child policy, the growth rate of population has fallen down. But every policy has its side effects, adopting one child policy has raised another problem “Aging Population”. Another reason for this is increased life expectancy. One of the biggest challenges for China is the Gender Imbalance with male to female ratio of 128:100. Being one of the booming economy in the world, the decline in poverty is one of the achievement for China. The population below poverty line has come down from aound 64%.
Social aspect of Beef in China Beef products are socially accepted in China. Consumption of beef is very high in Winter. Chinese people prefer fresh meat instead of frozen products. Beef consumption is expected to be increase in next 20 years.Conclusion: As per the information mentioned above, There are no such social barriers to enter into the Chinese Beef industry.
Technological overview of China China has many R & D institutions which make them very well equipped for advanced research. Chinese people don’t want to enter the field of research because of the low compensation and no incentives. Another drawback in Chinese R & D, Government interference in R & D with week enforcement of cyber law. Funding for R & D is very non optimal. Special Economic zone have been created for R & D centers.
Technological impact on Beef Processing There are two ways of Slaughtering equipments, first one is very crude which has a poor quality & utilization ability for beef cattle. Second slaughtering equipments is advanced the slaughtering ability is very strong, but the beef cattle is fall short of demand, which make these advanced equipment in a shutdown condition in most time. Quality of Chinese beef product is low because of the processing method. There is one technology named beef acid which refers to carry out the quarantine system and cooling processes rapidly of carcass after slaughtering. The Chinese technician should learn the production process, western beef products processing method.
Legal overview of China Favourable policies to attract foreign investments. Political involvement in legal matters is also another important factor for future risks. China has a developed and organized judiciary. Because of a week implementation of corporate laws companies are not in effective compliance.
Legal requirements for exporting to China To export frozen meat and poultry products to chine, certification is required. FSIS form 9060-5 and form 9295-1 are the certificates related to meat and poultry products. Importers of beef should have a valid license for entry of meat and poultry products into the country. Beef meat and meat products should be certified by WHO, FAO & OIE that the products are BSE infection free.
Environmental overview of China Vast areas of land cover under forest. Evolving environmental policies. High pollution levels. Farmers shifted to Beef farming.
China has biologically diverse environment and vast land is cover by forest in China. In 2003 China has banned beef from Canada because they were worried about the mad cow disease. China have increased the regulation on beef due to diseases caused by it. Farmers shifted to beef farming in China because of increase in demand of beef. Conclusion- Environmental conditions seem favorable for Beef products in China.