PEST Factor: Economic
Since the 2008 financial crisis, China has been “recovering” in terms of their retail businesses and other service industries. However, exporters and manufacturers seem to be in a bit of a struggle. There is slower growth from exports, manufacturing and investments, and China (Beijing in particular) is trying to rebalance the economy by promoting growth in consumer spending, service industries and technology. The reason for the government to promote an increase in consumer spending is due to the rising wages in the economy. This will cause an increase in Adidas’s sales as China is one of Adidas’s three “attack markets.” Another positive impact is that retail spending will rise faster than overall economic growth, and this means more people will be buying retail products from various businesses, including Adidas. However, there are some negative implications of this issue. For the production department of Adidas, it may become more costly to manufacture in China because of the rising wages. So, the human resources department will have to make the decision on who to hire (probably a more experienced/skilled worker if wages are increasing). But, if it does become more costly, Adidas can opt to move to less expensive areas in China or less developed countries such as Vietnam, but that will cause a controversial issue with Adidas’s corporate social responsibility.
Source:
http://finance.yahoo.com/news/chinas-economy-recovering-torrid-growth-over-075921152--finance.html
Since the 2008 financial crisis, China has been “recovering” in terms of their retail businesses and other service industries. However, exporters and manufacturers seem to be in a bit of a struggle. There is slower growth from exports, manufacturing and investments, and China (Beijing in particular) is trying to rebalance the economy by promoting growth in consumer spending, service industries and technology. The reason for the government to promote an increase in consumer spending is due to the rising wages in the economy. This will cause an increase in Adidas’s sales as China is one of Adidas’s three “attack markets.” Another positive impact is that retail spending will rise faster than overall economic growth, and this means more people will be buying retail products from various businesses, including Adidas. However, there are some negative implications of this issue. For the production department of Adidas, it may become more costly to manufacture in China because of the rising wages. So, the human resources department will have to make the decision on who to hire (probably a more experienced/skilled worker if wages are increasing). But, if it does become more costly, Adidas can opt to move to less expensive areas in China or less developed countries such as Vietnam, but that will cause a controversial issue with Adidas’s corporate social responsibility.
Source:
http://finance.yahoo.com/news/chinas-economy-recovering-torrid-growth-over-075921152--finance.html