Paul Smith to China

Table of Contents

Introduction 2

Paul Smith Company Profile 2

Should Paul Smith Ltd. Enter into China? 2

PESTEL Framework Analysis on China 3

Analysis from the Political Viewpoint 3

Analysis from the Economic Viewpoint 4

Analysis from the Socio-Cultural Viewpoint 5

Analysis from the Technology Viewpoint 7

Analysis from the Environmental Viewpoint 7

Analysis from the Legal Viewpoint 7

Rationale to venture into China 8

Entry Modes suitable for Paul Smith Ltd. expansion to China 9

Direct Exporting 9

Licensing 9

Strategic Alliances 10

Conclusion 11

References 11

Introduction

In the 21st century, businesses large and small have one way or another linked in the world wide operations. It is therefore very important to analyze and evaluate carefully organizations' competitive advantages and strategies in its international operation. In this paper I will analyze Paul Smith Ltd. expansion into the international market. We have chosen China as the country of interest and analysis will be focused on both cultural and economic environment in the country.

Paul Smith Company Profile

Paul Smith Ltd. established in 1970 and is based in Nottingham, United Kingdom. The company operates a large chain of clothing and accessories boutique. It offers both men and women fashion clothing and accessories. Among the accessories are watches, pens and fragrances. The company operates boutique shops in United Kingdom, France, United States, Chinese Taipei, Japan, South East Asia region, Korea, Middle East countries namely Dubai and UAE. Paul Smith Ltd. Main focus of the company is in Japan and there are over 200 boutique stores in Japan alone (Source: http://www.paulsmith.co.uk/).

Should Paul Smith Ltd. Enter into China?

It is important to conduct analysis before deciding even to enter into a country. No doubt that Paul Smith Ltd. has been successful as an international brand of clothing line especially in Japan. In this paper I will discuss and analyze should Paul Smith Ltd. enter into China as the largest market in Asia. I will conduct PESTEL analysis to gauge the attractiveness of the country and if should Paul Smith decide to enter; what are the entry modes that suit the company best. As such the paper will begin with PESTEL analysis to engage the six factors to determine the attractiveness. Followed which we will then decide the entry modes into the country by selecting a mix of entry modes into the country.

PESTEL Framework Analysis on China

PESTEL framework analysis is used to analyze macro view of a country to determine its viability to conduct businesses in the country. The key areas in focus are political system and stability, economic stability, socio-cultural practices, technological advancements, environmental efforts and also legal and judicial systems in China. The whole framework presents a holistic view reflecting country stability, market opportunity and favorable business environment (Daniels et. al., 2008).

Analysis from the Political Viewpoint

Political overview. People's Republic of China is based on socialist or communism in its political system. It is a one party state controlled by the Chinese Communist Party. Over the years China has successfully put country stability as their main focus to ensure continuous economic growth. However in 2009 there were ethnic unrest in the region Xinjiang and Tibet which do not pose any threat to its political stability (Central Intelligence Agency, 2011). This turn of events has China shifted its political viewpoint to create stable and sustainable economic growth; with social welfare focused on the outskirts of China, minority ethnics and minority groups' interests (Canfei, 2003).

Through open market initiatives by Chinese government to attract and invite investors some policies were implemented, which includes reduction in taxation to foreign companies, creating designated free trade zones such as Shanghai and Shenzhen, investing in public amenities and facilities to attract foreign investors, and continuously liberalizing their trade regulations to create attractive