Analyzing Potential Markets For Pet Food Industry: China And United Kingdom

Socio-economic environment of China and United Kingdom

Discuss about the China and the UK as possible markets in world.

Having the potential for increased production, Queen’s Petfood has engaged Data analysis between China and the UK. The Preliminary research has identified China and the United Kingdom as possible markets in the world. This report discusses the potentiality of the markets of China and the United Kingdom. It discusses the socio-economic environment, political ambience and potential risks, business environment of these two countries and identified market potentials. It concludes with China as the choice market for successful import of the company’s products.

China is the largest country of the world with the largest population. This country has a socialist market economy which is the second largest economy in the world. It is the world’s largest economy by purchasing power parity. It is the fastest growing major economy which records the growth rate average of 10%over last three decades. As the economy has shown major growth, the GDP of the country is also growing fast. It has a huge reserves of rare earth metals and essential ores like coal and iron. This is the reason why the government has taken drive to industrialized the country (Liu et al., 2015). The higher rate of savings by the Chinese citizens and skilled yet cheap labor supply has helped the country to flourish that much. Social behaviors of the people and trends change with time. differences can be found in the lifestyle, emigration, religion and education.

The economy of this country has a great variety. Population of UK has always helped its economy to grow. The country has scope of improvement in both the private as well as public sectors. The rate of foreign direct investment is also very high in this region. With the changes in the interest rate the country has recorded positive changes in the economy. New entrepreneurs are encouraged by the UK government. The country has one of the highest level of income hence has a high standard of living. The markets have to cater for more than 60 million domestic customers as well as increase the scope for investment in the country.

The political stability is the chief potential for China. For being a single party state, the government has very important role in the economy of China. The government regulations are much stricter. Formal and informal regulations are to be obeyed by the domestic as well as multinational companies. There are highly settled governmental monitoring in the market along with every aspects of business. As the government has taken drive to grow the economy by the means of industrialization, the domestic entrepreneurs and foreign investors are motivated to strategies to capture this market. However, the constant interference in the business and monitoring every move by the government agencies pose high risk for the exporter as well as entrepreneurs.

Political ambience of China and United Kingdom

The political situation of the country is highly stable. Despite the fact that the issues associated with Brexit had created much problem in the last year, but the situation has become more improved than before. The uncertainty had made barriers in trade and led to separation but now the country has overcome those situations by making proactive decisions (Li & Tellis, 2016). The people has a great influence in the inner-work of the country as the administration split between the local and national administration maintain proper connection among themselves. The economy depends on other European nations so also the political decisions hence there are potential risk for the business (Forde & Slater, 2016).

The business environment of China has become much easier to operate in and navigate for the foreign companies in the last decades. A series of procedures to ensure the steady growth of FDI and make these foreign investment environments more regulation-based, convenient and internationalized (Kirkby, 2018). The opportunities for operating in China is endless as the market is unbelievably large. The country’s legal frameworks as well as the judicial system are fair hence actually work. In general, these have protected the foreign companies whenever they require protection, and this is the most encouraging factor for most of the foreign investors. The government has taken business-friendly incentives along with policies for all types of companies. This has proved to be proactive as well as helpful. The supply chain in this country supports the business hence allows them to manufacture products which are competitive on the global stage.

The United Kingdom is one of the most desired European market for international expansion. Due to the economic and political dependency on the European Union, the business of the country has faced many economic turmoil and some unique economic challenges. However, the business of the UK has managed to remain positive, open and forward looking. the government has committed to create a very supportive business environment which has encouraged the private sector led economic recovery (Burns, 2016). It is one of the moist attractive place in Europe as more overseas comedies has been trying to enter the market as well as invest in it. It is the world’s second largest service exporter recording a long term growth (Clougherty et al., 2017). It is the best and safest place to set up a business as the country provides a potential competitive environment for all types and sizes of companies. The Plan for growth by cutting the corporate tax rates as well as regulations, developing the skills of the labors, investing in the infrastructure and reducing planning burden the government of the UK has provided this competitive platform for foreign countries.

Business environment of China and United Kingdom

China is promising growth in the pet industry of the world. With high population, the pet owners in the mega-cities of the country has been creating huge scope for the pet food exporters. Due to amplified disposable income, both the domestic as well as international pet food companies have began to move into China’s fast growing pet food market (Visser & Tolhurst, 2017). The pet food Industry has reported some key factors about the country’s pet food market.

First, China leads the Asia Pacific region in terms of owning pet.

Secondly, the megacities like Shanghai and Beijing, account for largest pet ownership which need import of pet food in these regions.

Thirdly, Disposable income of the China households especially in the urban areas has grown fast since 2010 and forecasts to increase which means more people will be looking to pets as companions (Aldrich & Koppel, 2015). These people will become potential customers as they are willing as well as able to spend huge on their pet than ever.

Finally, the pet industry in the Chines domestic market has not been developed yet and will take much time. This is the reason; the market has a huge demand for the foreign brands of pet food. Hence importing products in this industry will be much profitable for the company.

The import of pet food in the UK is much less than that of in China. Depute the fact that increasing GDP as well as consumer confidence fuel the pet spending in the country especially in the food items (Mason & Harrison, 2015). The Consumers of those country are much inclined to spoil pets with luxuries such as premium foods and wet prepared foods. This high spending habit on the pets and these trends contribute to increased humanization of the pets. The consumers are keen to spend more money on order to keep pets healthy and happy (Petbusinessworld.co.uk 2018). Hence it has a potential advantage for the pet food business of this marketing opportunity.

Variable	Weighting	United Kingdom	China
Score	Adjusted Score	Score	Adjusted Score
Potential Market	25%	4	1	6	2.00
Wealth Distribution	25%	2	0.50	5	0.75
Economic Freedom	15%	6	1.50	3	1.25
Taxation & Tariffs	15%	4	0.50	7	0.75
Political Stability	20%	6	1.20	8	1.50
Total	100%		4.7		6.25

China is more potent country to be entered in. the commercial infrastructure of this country is as good as that of the UK but the political as well as economic risk is much lower than the UK. The market size is much larger than that of the United Kingdom and showing sharp growth for last ten years. This emerging market of China do not have much domestic competitors as it is there in the UK. Despite the fact that the economic freedom is less in China but there is high economic equality hence the middle class households can be the target of the comedy. Over all, the Chinese market is more promising than that of the UK.

Conclusion:

Therefore, it can be concluded that both the countries have growing potential market for the pet food industry. The stability and support of the government can be a key factor for the company but China has much less risky market than that of the UK. From over all discussion, it can be said that through the trend of keeping pet in high in the UK but the Chinses pet industry have less competitors. Thus can be better for this pet food company.

References:

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Kirkby, R. J. (2018). Urbanization in China: town and country in a developing economy management 1949-2000 AD (Vol. 3). Routledge.

Li, Y., & Tellis, G. J. (2016). Is China uniform? Intra-country differences in the takeoff of new products. Technovation, 47, 1-13.

Liu, L., Oza, S., Hogan, D., Perin, J., Rudan, I., Lawn, J. E., … & Black, R. E. (2015). Global, regional, and national causes of child mortality in 2000–13, with projections to inform post-2015 priorities: an updated systematic analysis. The Lancet, 385(9966), 430-440.

Mason, C. M., & Harrison, R. T. (2015). Business angel investment activity in the financial management: UK evidence and policy implications. Environment and Planning C: Government and Policy, 33(1), 43-60.

Petbusinessworld.co.uk. (2018). How much are Brits spending on Management?. Retrieved from https://www.petbusinessworld.co.uk/news/feed/how-much-are-brits-spending-on-pets-

Visser, W., & Tolhurst, N. (2017). The world guide to CSR: A country-by-country analysis of corporate sustainability and responsibility. Routledge.

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