Problem Statement- Asses the situation of China and, after a round of brainstorming, googling and fact-checking, come up with a solution that can liberate the country of its present problems. The solution that you are providing must take into account how China can lure in companies, solve its COVID crisis, internal issues and pay its labours sufficiently. The case study entailed making a countrywide strategy in the wake of the COVID-19 crisis. My solution revolved around suggesting the country from being a manufacture driven economy to a service-driven one, as almost all developed nations have a strong service sector that contributes a significant chunk to the GDP

1. RanNIT-E (Case Study Solution)
PRESENTED BY-
BISWADEEP GHOSH HAZRA
COLLEGE- XAVIER INSTITUTE OF MANAGEMENT,
BHUBANESWAR

2. 1
SETTING THE CONTEXT
In order to understand how China can get back on its feet, it is important to understand what it did right in
all these years. The following images give a glimpse of China’s impressive growth in numbers from past
until recent times-
Source (China’s GDP over the years) Source (China’s Exports over the years)
Source Source
The fact that Tertiary Industry (Services) has grown from a meager 24.6% in 1978 to over 50% in 2017 is a
testimony to China’s growth. The service industry claims a higher percentage in GDP in any of the developing
countries. It is the service industry that makes the distinction between a commodity and a brand/product and
is the place where most of the value addition takes places
The picture below shows the rapid urbanization that China witnessed, and it was at 58.52% compared to a
measly 17.92% in 1978. At an annual average growth of 16.44 Mn, there were 810 Mn permanent urban
residents in China, an increase of 640 Mn from 1978
China’s one child policy has led to a shrinking
growing population, as is evident by the yearly
population growth image which is at a decline.

3. 2
AN OVERVIEW OF CHINA (BEFORE COVID-19)
China, until now, has enjoyed its competitive rivalry with the leading nation of the world, USA. As the
images show, China accounts for-
o 12.5% share in Global Trade (one eighth)
o 70% of the world’s High-Speed Rail Parts Production
o 60% of World’s Cement
o 60% of World’s Solar Panel production
Source for the image
The Urban population is the fuel that allowed giants
like Alibaba, Tencent, Weibo to thrive locally
without having considerable international
footprint.
China’s private sector accounts for 60% of the GDP,
80% of urban employment and 90% of new jobs.
Thus, it goes to show that China has benefitted a lot
from its days of Mao Zedong who wanted a system
where the government owned the entire means of
production

4. 3
COMPETITOR ANALYSIS
Insights-
 China’s population is both a boon and a bane, as it ensures that labor remains cheap, but a populous
country is harder to control and reduces parameters like Per Capita GDP
 China’s telecom improvements are showing in the form of its massive growth from 2000 to 2020
 China’s literacy rates are impressive, considering it is the most populated country on the planet. India,
the second most populated country is lagging behind significantly
 China’s massive trade deficit is one of its headaches, and until the country fully transitions to the
service sector, it is going to be a source of the problem
 One of China’s strong points is its massive foreign reserves
 With an improvement in policies, the Ease of Doing Business rank of the country will definitely
improve
 China’s HDI is a long way off from developed countries validating the fact that it is compromising on
the quality of life over economic development
 China’s exports top the list overtaking USA proving the phrase that it is indeed the manufacturing
house of the world
 As China develops and its medical facilities improve, so will its life expectancy rate and then it can
compete with other developed countries in this and other parameters
China USA India Germany UK France Japan Russia Italy Brazil Saudi Arabia
Parameters for Consideration
GDP (2020) [Nominal] (US$ Bn) 15,269.94 22,321.76 3,202.18 3,982.24 2,716.53 2,771.62 5,413.05 1,657.54 2,013.67 1,893.01 783.34
GDP-Per Capita (2020)
[Nominal] (US$)
10,873 64,247 2,338 47,992 40,392 42,644 43,043 11,305 33,431 8,956 22,533
Gross National Income (GNI)
per capita (PPP $) (2019)
16,127 56,140 6,829 46,946 39,507 40,511 40,799 25,036 36,141 14,068 49,338
Internet Growth (2000-2020)
(in %)
3,796 328 11,200 329 413 710 252 3,751 415 2,980 15,808
Unemployment Rate (in %) 3.9 4.4 8.8 3.8 4.4 9.5 2.9 5.5 11.1 11.8 5.8
Trade Deficit (in US$ Bn) -375.576 -621.000 -22.914 -63.678 3.198 -15.303 -68.876 -10.023 -31.513 7.770 2.530
Foreign Exchange Reserves (in
US$ Bn)
3,101.69 129.26 507.64 245.06 179.23 237.83 1,378.24 570.80 190.22 345.71 448.15
Ease of Doing Business
Ranking (2019)
31 6 63 22 8 32 29 28 58 124 62
Literacy Rates (2020) 96.4 99 71.2 99 99 99 99 99.7 99.15 93.23 95.33
Human Development Index
(HDI) (2019)
0.758 0.92 0.647 0.939 0.92 0.891 0.915 0.824 0.883 0.761 0.857
Life Expectancy at Birth
(Years) (2019)
76.7 78.9 69.4 81.2 81.2 82.5 84.5 72.4 83.4 75.7 75
Exports (2020) (in US$ Bn) 206.8 151.3 19.05 75.7 46.4 26.5 0.04 23.5 25.01 17.9 63.6
COUNTRIES
https://worldpopulationreview.com/countries/unemployment-by-country/
https://www.internetworldstats.com/top20.htm
https://worldpopulationreview.com/countries/us-trade-deficit-by-country/
http://hdr.undp.org/en/content/2019-human-development-index-ranking
https://tradingeconomics.com/country-list/exports
Source
http://statisticstimes.com/economy/projected-world-gdp-ranking.php

5. 4
SWOT ANALYSIS OF CHINA
Government Structure: The National People’s
Congress is the national legislature of the country
having 2,980 members (2018) and governance is
divided amongst four primary bodies. A centralized
government helps in faster decision making.
Cheap labour: China is known for its labour. The
cost benefit of cheap labour often times overcomes
the problems in quality. A booming population
means more labour at lucrative rates
Rising GDP: From 1990, China has witnessed a
tremendous GDP growth (with peaks of 14.22% in
1992, 14.23% in 2007, 10.64% in 2010). This can be
attributed to favourable government policies
Foreign Exchange Reserves: China has the highest
foreign reserves in the world (US$ 3102 Bn) which
helps them immensely in economic reforms
Booming Telecom Sector: More than 64% internet
penetration (mostly using 3G), 904 Mn people has
internet access, 1.5+ Bn cell phone subscriptions
indicate a high growth trajectory
Selective and restrictive nature: China has
restricted itself largely to the domestic market. Very
few companies in China are renowned worldwide,
barring a few sectors such as telecom (Oppo, Vivo,
One Plus). The country has banned Facebook,
Google, Twitter, Netflix from entering due to its
restrictive nature
Restrictions: There are heavy restrictions on
mortgage lending and property sales in the country
from 2016. This has impacted the other associated
industries as well like steel, concrete and
construction material.
Unemployment: China although has advanced
technologically, it has a high enough unemployment
rate (3.9%). 26% of the country is still dependant on
agriculture compared to 2.5% in USA but agriculture
contributes to only 7.1% of the GDP
Banking issues: Studies by the IMF has shown that
Chinese Banks are undercapitalized which would
invariably lead to monetary issues in the future
Negative PR: China’s biggest chink in the armour.
Due to its image, China gets into a lot of tensions and
receives flak. Businesses view China as a restricted
zone, a necessary evil
Population:This is another glaring issuethat China
needs to tackle. Pollution, smog and deteriorating air
quality means further strengthening of the negative
perception. Although, China has improved its PM 2.5
by 47% between 2005 and 2015 and in 2019 it was
42 ug/m3, a lot still needs to be done
Disputes: China has been known to get itself
involved in matters regarding territory and control. It
is still in dispute with India over border issues and
with Japan and South Korea regarding the East China
Sea dispute
Opening of borders: A lot more Foreign Direct
Investment (FDI) could come into the country if the
rules were a bit lax
Service Sector: All developed countries have a
flourishing service sector and developing countries
pass through a cycleof agriculture & manufacturing
sectors before settling on the service sector where
primary value addition takes place
Urban Migration: Increasing people migrating to
cities, this presents a unique opportunity for China
to cater to this market (277.47 Mn migrant workers
in 2015) in Urban areas
Improving Trade Relations: Favourable trade
relations with countries will reduce trade deficits

6. 5
SERVICE SECTOR IN CHINA
Service sector of other countries-
 USA (79%)
 Japan (73%)
 Brazil (69%)
 India (57%)

7. 6
Growing service Sector of China-
 China's service industry accounted for 52.2 percent of the total GDP, up 11.5 percentage points
compared with the secondary industry (2018)
 Since the 13th Five-Year Plan (2016-2020), China's service trade has registered a faster average
growth rate than the global level
 imports and exports of knowledge-intensive service rose 20.7 percent to 1.7 trillion-yuan, accounting
for 32.4 percent of the total service trade and up 2.5 percentage points from a year earlier (2017)
 China's service trade maintained stable and sound development with its total service trade rising 2.6
percent to 1.29 trillion yuan in the first quarter of 2019. Among them, imports and exports of
emerging services jumped 12.6 percent to 463.49 billion yuan
 China provided US$228.1 billion worth of export services to clients around the globe during 2017.
That dollar amount is 4.3% of the global total for services, and represents about one-tenth (10.1%) of
the $2.263 trillion in exported products China shipped over the same timeframe.
China’s Export Services by Category
Below are services exported by China in 2017 listed by category and in order starting with highest dollar
values. Eleven of these categories are considered commercial services and are worth 99.3% of all exported
services from China. Government goods and services account for the remainder.
1. Miscellaneous business services: US$61.5 billion (27% of China’s total)
2. Travel: $38.8 billion (17%)
3. Transport: $37.1 billion (16.3%)
4. Telecom/computer/information services: $27.8 billion (12.2%)
5. Construction: $23.9 billion (10.5%)
6. Manufacturing services on other’s inputs: $18.1 billion (7.9%)
7. Maintenance/repair services: $5.9 billion (2.6%)
8. Intellectual property use: $4.8 billion (2.1%)
9. Insurance/pension services: $4 billion (1.8%)
10. Financial services: $3.7 billion (1.6%)
11. Government goods, services: $1.7 billion (0.7%)
12. Personal, cultural, recreational services: $759.3 million (0.3%)
China’s Export Services by Top Trade Partners
Back in 2016, China provided export services to 13 geographic entities including countries, islands or
territories. The largest of these trading partners was the European Union, which consumed 16.6% of China’s
overall exported services for the year.
The following list highlights 13 countries (or territories) that imported the highest value of services
furnished by mainland China. Together, these 13 trading partners received 70.1% of Chinese services
provided to international clients.
1. Hong Kong: 28.7%

8. 7
2. United States: 14.9%
3. Japan: 5.5%
4. South Korea: 5.1%
5. Germany: 3.8%
6. United Kingdom: 3.4%
7. Taiwan: 3.2%
8. Macao: 1.9%
9. France: 1.8%
10. Russia: 0.7%
11. India: 0.4%
12. South Africa: 0.3%
13. Brazil: 0.3%
Possible Services sector to grab
 Financial Services
 Insurance Services
 Repair and Maintenance services
 IT services and Consulting
 Educational Services
WHY CHINA IS SAFE, FOR NOW
Online movements from India like #boycottchina will never work, at least when it comes to mobile phones.
The following images illustrate Amazon India’s Mobile section-

9. 8
 As these images show, most of the brands dominated on the front page are the ones owned by BBK
Group of Electronics, the parent company that owns brands like Vivo, Oppo, OnePlus, Realme and
iQOO
 Redme (owned by Xiaomi) and Huawei and Honor (owned by Huawei) are other heavyweights
that can be seen on the screen
 Samsung, iPhone, and Nokia make up the non-Chinese brands on the page
 Indian brands like Micromax and LAVA are nowhere to be seen
If the situation is like this in an anti-China country like India, the situation has to be more favorable in other
countries that Amazon serves. In addition, companies will always look to maximize stakeholder value, and
this is often done by increasing profits. Thus, companies, unless pushed to extreme lengths by their
government, in their own accord, will not shift their bases from China.
At least not until a cheaper and more sustainable option is found.
WHAT CAN BE DONE
o China has a trade surplus with most countries owing to its massive production facilities. The status-
quo needs to be maintained
o For companies willing to move from China-
 Immediately offer them subsidized essentials like electricity, high speed internet, rent and other
amenities
 In the longer term, trying to establish more SEZs with attractive benefits for foreign companies
o For companies deciding to new centres for manufacturing and other services-
 A slow transition from manufacturing to service sector has to be put into place
 Although China has several high-quality educational institutes, more such places of education
needs to be setup to properly train the workforce and make them highly skilled for services
 Appealing to migrated Chinese living in other countries to come and contribute towards
building a better China
o For PR the PESO Model combined with Agile PR can be followed, this would ensure that the model
can adopt its strategies according the changing times

10. 9
Source: Statista
Source: Self-Created

11. 10
Source: Self-Created