China’s Economy- Whilst performing a close analysis on the economic and manufacturing standpoint of China, what are the main factors that must be taken into consideration?
Currency – China VS The Netherlands
A very large part of expanding a business to another location, especially outside of the European Union, is analysing the currency and exchange rates of that country in comparison to your own country’s. As found on the Currency Encyclopedia; CX, the Chinese Yuan Renminbi is the currency of China. Their currency rankings show that the most popular China Yuan Renminbi exchange rate is the USD to CNY rate. The currency code for Yuan Renminbi is CNY, and the currency symbol is ¥. In comparison to the Netherlands, once again according to www.xe.com, 1 euro is equivalent to 6.81086 yuan. When acknowledging the comparisons over a year, this is the outcome:
The Economics of the “China-Price”
Manufacturers in China have the ability to significantly lower their prices compared to foreign competitors, they are able to produce a large range of items at a much lower price. Due to this, China has taken over 70% of the world’s market share for items such as DVDs, toys, more than 50% for bikes, camera, shoes and telephones, and more than one-third of air conditioners, colour televisions, computer monitors, luggage and microwave ovens. China has established dominant market positions in everything ranging from furniture, refridgerators, washing machines etc.
These are main factors that contribute to the “China-Price” theory: The China price advantage consists of
Lower labour costs = 39%
A highly efficient form of production known as “industrial network clustering” = 16%
Catalytic foreign direct investment = 3%
Unfair trade practices of foreign investors:
Export subsidies = 17%
Undervalued currency = 11%
Counterfeiting and privacy = 9%
Environmental and worker health and safety regulatory regimes = 5%
The data povided on wages and...