Question

1. Will China maintain its strong economic growth in the years to come? Some suggest it will until 2050. what do you think?

2.If China will go from 17 million to 190 million middle-income people by the year 2020, would the scenario presented Best buy in 2006 not be applicable anymore? That is, the culture shock in 2006 was that the Chinese would not pay for Best Buy's overly expensive products unless they are a brand like Apple. Would newly rich Chinese customer engage in this purchasing by 2020?

3.With Alibaba's ownership of the very popular TaoBao online shopping system(similar to ebay and amazon) and its spread across the world, will a Western-based online shopping culture ultimately infiltrate China?

Refer http://www.chegg.com/homework-help/people-s-republic-china-opened-foreign-direct-investments-fd-chapter-4-problem-3cdq-solution-9781259686696-exc

Answer 1

1.

A 2017 survey by the journel China Economist reveals the forecast of China's economic growth to be 6.6% in the next financial year and its debt to gdp ratio is quite low which implies that it is going to be at par with US economy in the next decade. The Chinese economists are affirmative and confident about their country's stable growth and credit it to the high competitiveness and government stability in China.

The International Monetary Fund (IMF) has remarked China on the top and that it produces 17% of the world gdp. China's economic growth has set an example for other developing countries to follow suite. One of the reasons can be contributed to the fact that unlike US, the goverment debt in China is mainly based on real assets while in most countries it is based consumption goods.

US has observed that majority of its exports have been concentrated to China in the past few years compared to the rest of the world. Though China has achieved lorals for its high gdp growth but its per capita growth is still below the US , it seems with low fertility rate and a incessantly rising economic growth will pave way for its higher per capita income in the long run.

So, the answer is Yes, China would maintain its strong economic growth in years to come.

2.

Ever since the Chinese economy opened up for FDI( foreign direct income) in late 1970s, there has been a spurt of global retailers trying to sell their products in Chinese markets which has increased the purchasing power of the people along with a gradual shift towards more people coming in the middle and high income groups. China has become a vibrant potential marketplace.

Companies like Best Buy and ebay had targeted the chinese markets driven by its low cost of production. Now, consumption will drive the growth prospectous rather foreign investment but culturally transforming this market success is not a straightforward process. Lack of understanding of personal beliefs, preferences,domestic demands etc has led to failed business ventures in China.

Thus, If China will go from 17 million to 190 million middle-income people by the year 2020, the scenario will change for sure and shift of the customer base and cultural trends will have strong impact on the companies like Best buy and consumers will not buy their expensive products unless they are brands like Apple. So, following a market strategy which is in compliance with the cultural trends in China and concentrating on its wholly owned chain of stores would help it to sustain in Chinese market.

3.

With Alibaba's ownership of the very popular TaoBao online shopping system(similar to ebay and amazon) and its spread across the world, it controls 80% of the chinese e-commerce markets.

it is better than its competitors as unlike ebay its sellers pay for the advertised promotions only and not a commission to ebay. Alibaba is also working on its establishment in terms of financial services and banking relationships.

Thus, in such a scenario it is obvious that a western based online shopping culture will ultimately infiltrate China.