International Investment Report Research Paper Example | Topics and Well Written Essays - 1250 words

International Investment Report - Research Paper Example China is the largest country among the four emerging economies of the world and other three countries include Brazil, Russia, and India. It is the fastest growing economy among all these four countries. Data for 2011shows growth rate of China has outpaced peers with sharp contrast in GDP, merchandise export and GDP average growth rate as shown in the image below: China is expected to maintain the growth momentum and outpacing its peers even G7 countries over years in future for many reasons with increase in middle class being among the leading ones. Rising middle class refers to increase in income bracket of large number of people. This trend has a constant positive growth projection to year 2050 as shown in the image below; hence, it can be predicted that there would be increasing opportunities of investment in China. To mention, the world’s largest coffee shop Starbuck has also planned to expand in the more 70 smaller cities of the country (Bloomberg, 2012). This report anal yzes China as an investment opportunity for a coffee house and for this purpose; the report will analyze the macroeconomic factors that could influence the business in the country. The report discusses about the economic, financial, political factors along with historical events that could impact the business and its geographic location that could influence the business in the country. At the end, the report analyzes the overall risks that businesses could face while starting a business in China. (Global Sherpa, 2011) (Global Sherpa, 2011) ECONOMIC STRUCTURE, INDICATORS AND RISK ... This slowdown has been controlled by the targeted stimulus. For instance, construction of 36 million social housing units, support for SMEs in Wenzhou, bonuses cut down in the automotive sector, and subsidies on purchase of household electrical appliances etc. All these factors have supported the economic situation despite having troubles with export (Coface, 2010). FINANCIAL STRUCTURE, INDICATORS AND RISK Financial factors other important influence the businesses. Risk rating for the country is as follows: (Coface, 2010) However, access to finance for SME is difficult as banks are reluctant due to string of defaults as the main risk. Also overall strict policies have been imposed on banks for credit giving to avoid misallocation of resources etc (Coface, 2010). The overall financial figures are positive as investment in the country has increased, poverty level has decreased etc. The coffee shop market is expected to grow by 55 percent and it would reach to 4.5 billion Yuan ($714 mil lion) in 2015 from 2.9 billion Yuan last year in 2011. To share this benefit, global coffee competitors such as Starbucks of US and Luigi Lavazza Spa, an Italian coffee company have entered and planned expansion in major and minor cities of China (Bloomberg, 2012). POLITICAL STRUCTURE AND RISK China has been mainly a socialist country. However, the country has accepted the capitalism mode of economy but socialism is still what it breathes. The political risk refers to intervention of country’s government in the business affairs of the foreign person or a company that is doing business in the country. China is usually accounted for this political risk and its government has already once considered the nationalization of industries in 1949 (China Risk Management, n.d.).