The product which we are trying to sell is Body oil, which is cosmetic. The Cosm
ID: 373715 • Letter: T
Question
The product which we are trying to sell is Body oil, which is cosmetic. The Cosmetic industry in China is developing at a rapid pace, plus the fast-growing economy of the china due to its GDP growth which has grown over the years due to its manufacturing activities, have lured many reputed companies from the world to come and set up shops in China.The cosmetic industry in China is expected to grow at a steady rate of 20.8% CAGR, which is the best time to invest in the country, plus there is huge demand of Skincare products, which contribute approximately 65% of the total cosmetics sold there.
Analysing the Chinese market before entry would help us to know the market better and prepare the launch in a subsequent manner. PESTLE (POlitical, Economic, Social, Technological, Legal, Environmental) is one of the best instrument to check the market environment for a particular product, let us see more in details
Political
Political analysis of a country would help us to know the political scenario, which would tell us that if the government in that country is stable or not, will our product have any political barrier in making entry to a particular country. The business impact due to the tariffs imposed by the country. Here in China the tax on the imported cosmetic products, range between 50% to 60%, which is on the higher side, this cost would be eventually lead to higher costs transferred to the end consumer. Hence it says that if the product is imported then the price would be higher, but the companies who would manufacture the product in the country they would enjoy low prices as the tax would be less, plus China being a manufacturing hub it would be inexpensive to manufacture it there.
Economic
Economic factor helps us to understand various parameters which would be related to the economy, such as, Inflation, interest rate etc. This would help us to understand the influence the economy would have both on the companies and customers. for instance, if the interest rate comes down, then the people would not keep their money in the bank, they would rather withdraw it and try to invest in the something which would give them better returns. In the above-said scenario, Dolly Moo would have the advantage to utilise the money which people of China have in their hand, in such case the purchasing power of the people would increase. Plus the Chinese Yuan is more of fluctuating currency, it is not stable if Dolly moo uses it would be affected by the ups and downs due to devaluation and revaluation of the Yuan.
Social
Social factor of the country tells us about the social values, their culture, the living standard of the people and etc. As we saw earlier that the economy of China is growing at a steady rate, hence people are bound to have a better standard of living due to increased value creation, this means they would spend more. The people of China are more concern about their appearance in the society, they concentrate on social well being. Hence this is the best opportunity for Dolly Moo to invest in the Chinese market, they consume more cosmetic to look better and be best in the society. This would boost the sales in China.
Technological
A biggest technological issue in China is that the of the Business to Consumer industry does not have a safe and stable online payment system. Hence Dolly moo could invest in an Online portal where it could sell its product. plus it would have to invest in SAP modules, where the shops could easily order the products without any manual interference. Many of shops in China use the SAP to order the products from the parent companies, which also helps them in keeping the records and hassle-free ordering process.
Legal
China follows the socialist principle, where they believe in better and collective growth of the people, the laws are also aligned with the same principle. There no such laws, which would hamper the sale of the Dolly Moo Bodu Oil. But there would be certain guidelines for advertisement of the product, which should be followed or else it would hamper the growth prospect of the company in the Chinese market and may land up in a legal turmoil.
Environmental
The environment is the least seen factor by majority companies if the environment is considered while considering and selling the product, half the issues would be resolved. To keep better future, the environment must be conserved, Dolly Moo would have to develop the product which would be suitable for the Chinese environment and which would not impact the environment.
Explanation / Answer
please write a 1000+ words PESTEL (political, economic, social, technological, environmental and legal) analysis introducing Dolly Moo Body Oil (an american Cosmetics company) into the Cosmetics industry in CHINA.
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