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China and India: Opportunities & Threats to UK

1. Delete as necessary The growing economic power of China and India has been the subject of much press coverage. Their economic strength comes, in part, from relatively low/high labour costs and small/large populations. Growth has been based on Chinas strength as a manufacturing/service base and Indias strengths in Information Technology and manufacturing/service industries. Together China and India account for a third of the worlds population, with an increasingly wealthy middle class and growing awareness of global brands, both countries present a significant threat/opportunity for UK companies looking to expand sales. Equally, though, the threat/opportunity of cheap imports from these countries have already had an impact on UK manufacturers. 2. What opportunities and threats are presented by India and China? Complete the table below: Opportunities UK Manufactur er of Luxury Foods 3. State the phrase or term explained by each of the following: 3.1 To benefit from lower labour costs many UK companies, such as BT and HSBC, have set up call centres in India. 3.2 The difficulties (legal, bureaucratic and cultural for example) that firms face trying to set up sales bases in Chindia. 3.3 Business spirit evidenced throughout Chindia; every opportunity to make money is quickly exploited. 3.4 Marketing based on a global strategy but adapted to local conditions. 4. Data response According to a survey by Cambridges Institute for Manufacturing (IfM) China is a potential treasure chest for UK companies. China has a reputation for manufacturing, but not yet for quality and innovation. The report sees opportunities for UK companies to share expertise with Chinese firms, especially in areas where China is weak and the UK strong namely R&D and quality systems. Equally, the UK Government recently called for a doubling of Britains exports to China from 5 billion to 10 billion a year. 4.1 State two possible advantages to a UK company of sharing its expertise with Chinese company. ______________________________________________________________________________________ ______________________________________________________________________________________ 4.2 Outline two possible reasons why the UK Government might believe a doubling of exports to China is possible. ______________________________________________________________________________________ ______________________________________________________________________________________ zbusinesstraining.com www.aThreats

______________________________________________________________________________________ 4.3 Discuss the potential issues a UK firm might face trying to sell products in China. ______________________________________________________________________________________ ______________________________________________________________________________________ ______________________________________________________________________________________ ______________________________________________________________________________________

1. MARK SCHEME - China & India: Opportunities & Threats to UK

1. low large . manufacturingserviceopportunitythreat 2. Opportunity Access to cheap Chindia produced raw materials. UK Manufactur er Exploit benefits of outsourcing. Potential for sales to Chindias large (and increasingly wealthy population). Negative PR surrounding outsourcing. Threat for smaller firms if larger UK firms are able improve price competitiveness by outsourcing/producing in Chindia. Threat Competition from cheap Chindia imports.

3.1 Outsourcing/Offshoring 3.2 Barriers to entry 3.3 Entrepreneurship 3.4 Glocalisation

4.1 Reciprocal sharing of manufacturing (mass production) expertise; access to Chinese markets; favourable prices on raw materials 4.2 Increasing wealth of Chinese middle classes; large population; increasing convergence of tastes; (some) reduction of barriers to trade; internet based sales opportunities; English widely spoken/understood. 4.3 Language/cultural barriers; marketing strategy issues - a standardised (global) approach to marketing or a localised one; threat from domestic competition; intellectual property issues; transportation issues (if goods manufactured in UK); distribution issues (due to Chinas size).

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