Table of Contents
China and it's Political and Economic Analysis.
Vietnam and its Political and Economic Analysis:
The main aim of the research is to analyze two Asian economies and compare and contrast the opportunities of a particular business in the counties. The research aims to compare the opportunity and political analysis of the two economies of Asia. The main aim of the research is to conduct the thorough analysis of the opportunities for the growth of Australian Company, to start a business in China or Vietnam. The research included a comparison of economic and political factors of China and Vietnam. The important advantages of starting a business in China are its strong infrastructure, cheap labor, developing sector. Vietnam also have important advantages of investment like growth in GDP, developing infrastructure, and political stability. Therefore, the facts depict that retail business of Australian company should be started in China instead of Vietnam.
The business sector in the World is boosting and there is a need of conducting a proper analysis of various factors before deciding the region in which business should be expanded. The main aim of the research is to conduct the thorough analysis of the opportunities for the growth of foreign Australian Company, to start a business in China or Vietnam. The research includes the overview and analysis of the economic and political factors of both the companies and includes the section of recommendations as well. The company that has been assumed in this research, that is analyzing the economy of China and Vietnam is assumed to be working in Retail Sector (Hu,2020).
China is a country that holds the record of being the world's most populous country. The estimated population of people in China is 1.4 billion, according to statics of 2019. The economy of China is developed and it provides many products and services Worldwide as well. The economy of Country is boosting and China’s GDP growth has even surpassed the government’s expectation of 6.5%. The economy of the country is further improvising and there are many important steps that are being taken by the government regarding the boosting of the economy of China (London,2018). The economy of China is growing and the government is paying extra attention to increase foreign investment in the country. The important advantage that foreign investors find in China is its cheap labor and it is the prime reason due to which many of the international businesses prefer to manufacture products in China (Nguyen,2007). The quality of the products that are being manufactured are sometimes questionable but the companies seek the advantage of cost-effectiveness of hiring cheap labor. The government is planning to draw the attention of foreign investors by attracting FDI to other countries (Wu,2016). The government is providing incentives to the companies like they provide the incentive of huge market size, and reduced labor costs, to the companies that start the business in the country. In addition to it, the government of China provides investors with quality of infrastructure, and supportive government policies to attract foreign investment in China. In China, FDI has contributed to an enhanced level of investment and improvised productivity growth. The Foreign Investment Law is a law of the People's Republic of China that focuses on foreign direct investment in China. National People's Congress adopted this law on March 15, 2019, and it is being practiced since January 1, 2020. In addition to it, the manufacturing industry of China is the largest industry of the nation and it contributes to more than forty-eight percent of its GDP (Quang, 2020). FDI in China in 2019 was $137 billion and China is the second-largest recipient of FDI in the world. The issue that other industries face while working in China is the fact that they have a strong “Home Based” approach of people. The regulations of the government are also increasing with time and the cost of manufacturing in China is also being increased with time. Therefore, China is a fine option for starting a business of the retail company (Trinh, 2017).
Vietnam has a population of about ninety million and it is ranked at number thirteenth in the world. Vietnam's economic conditions are continually being improved. Vietnam’s GDP per capita tripled from more than $600 per person per year in 2005 to almost $2,185 in 2016 (Hu,2020). Vietnam is an important country that is known for its beaches and culture. There are many tourist spots in Vietnam and its culture is very diverse and unique. Vietnam has emerged as a competitive country in the industrial sector. Many investors are starting a business in Vietnam and they are trying to increase the level of investment in Vietnam. According to InvestAsian, “many investors are looking at Vietnam but foreigners have, at least up until recently, had few options when investing in Vietnam. Vietnam stock market is among Asia’s best, outperforming competing exchanges in places like Hong Kong and Thailand”(Yu,2019)
The options that are available for investors to invest in Vietnam are very few and are less diverse (Anwar,2010). Recently, the image of China is being deteriorated by the myths that it is controlled strongly by the government. Vietnam is a country that has a young population and a very stable political system. Vietnam is a country that is committed to sustainable growth. In addition to it, Vietnam has relatively low inflation and a very stable currency. In addition to it, Vietnam has strong FDI inflows (Varese,2019). Vietnam has also signed the EU-Vietnam Free Trade Agreement, the Korean Free Trade Agreement, and the Eurasian Economic Union Free Trade Agreement. The labor costs in Vietnam are also lower and it is a great option for investment as well. There is still a risk involved with investing in Vietnam (Malesky, 2014).
Research included the thorough analysis of the opportunities for foreign Australian Company, to start a business in China or Vietnam. There are many important constraints that are analyzed in the above analysis and the research includes the overview of the economic analysis of China and Vietnam. Both countries are important countries that have a high value of FDI and they have a great opportunity to grow. As in the research, the economic analysis was performed for the sake of comparison of the benefits and drawbacks of starting a business in any of these nations. According to analysis, Australian company should start its business in China instead of Vietnam.
China has many advantages over Vietnam when investment in the business is considered. It is evident from the research that it has the top manufacturing industrial sector in the World. The company is intending to start its retail business in the country of Vietnam or China and therefore the option of investing in China is more suitable. Lower costs of manufacturing of retail products and labor in China provides an important opportunity and advantage to the company to start a business in China (Ma,2017)
The company is already operating in Australia and has a great experience of working in its industry. if the company starts its business in China, there is a great chance that the company will able to get fame and honor from people that are residing in China. As the important challenge that the company would face in this regard would be an increased level of competition in the industry and Home-based approach of the people (Qi,2018). The company could start by collaborating with the largest retail company in China and could boost its business there. The investment of the company in Vietnam is a good option but the company will need to face many important challenges in this regard because the economy of the country is not much developed as China. In addition to it, the company might face issues related to infrastructure as well. The infrastructure of China is well developed and more progressive. In light of the above facts and arguments, I believe that the Australian company should start its business in China instead of Vietnam.
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