Pestle trung nguyên in china

PESTLE model : Trung Nguyên -China
1. Introduction
About Trung Nguyên
Trung Nguyên is a Vietnamese business group involved in the production,
processing and distribution of coffee. The firm was founded in 1996 in Buon Ma
Thuot, Dak Lak Province by Dang Le Nguyen Vu. It’s the largest domestic coffee
brand within Vietnam. Trung Nguyen coffee is divided into 3 categories with 3
customer segments: high-end, mid-range, and regular. The most prominent of which
is the G7 product line.
About China- "
Billion Dollar Market"
China is one of the world's leading economies with a population of more than
1.34 billion people and a strong economic growth rate that is always a potential
market for any business.Coffee consumption culture in China is quite strong.
According to data from the China Coffee Association Beijing (CCAB), coffee
consumption in the country is growing at an annual rate of 15%. However, when
penetrating into a large and colorful market like China, what obstacles will Trung
Nguyen face? We will discuss it in this essay.
2. Political environment
China is considered a relatively safe business investment environment because
the political system follows the republican and democratic regime, has a single Party
to lead, so it is quite stable, there are few conflicts and internal conflicts between the
two countries. government and people. In addition, the national security situation is
well maintained and guaranteed. This helps businesses minimize the risks they may
encounter.
Government view on international business
With a focus on investment and export, the Chinese government always
considers industrial production a top priority in economic development. To stimulate
investment, domestic commodity prices (including energy prices and environmental
costs) are maintained at low levels. Moreover, the Chinese Government has
maintained low interest rates to attract investors; pegging the CNY to the USD at a

low rate in order to keep the CNY at a lower price than it actually is. This policy helps


to make Chinese-made goods cheaper, increasing competitive advantage in the global
market. Besides, China's production and export costs are also actively supported by
demographic factors. The working-age population is growing at a faster rate than the
population growth rate, and the low dependency ratio (the proportion of children and
elderly people per population size) has helped China to have a powerful force.
abundant labor, especially low-cost unskilled labor in rural areas. This model has
brought China a period of high growth, becoming the second largest economy in the
world.
International commerce
Eliminate discrimination for imported goods into the domestic market, remove
non-tariff barriers, open promotions for service industries such as banking, securities,
telecommunications and allow Foreign companies to have increased ownership and
facilitate distribution of goods in China. China follows a policy model of continuing
to promote export activities combined with trade liberalization in accordance with
WTO accession rules and conditions. Specifically, China enacted anti-dumping and
anti-dumping laws for goods domestic and foreign goods can compete freely in the
domestic market.
In addition, China also applies import management measures based on
national and international standards, especially standards on food hygiene and safety
and environmental standards. This makes investors very secure and eager to invest in
this market.
Political relations between Vietnam and China
Economic cooperation, trade and investment achieved strong growth. Twoway trade turnover between Vietnam and China maintained a good growth
momentum in the context of the epidemic negatively affecting trade of most countries
in the world. Vietnam is continuously the largest trading partner in ASEAN (since
2016), China's 6th largest trading partner in the world (since 2020).
=> Political relations between the two countries are towards peace and

friendship, making the commercial cooperation relationship between the two
countries develop stably and sustainably. This is good news for Vietnamese
businesses in general and Trung Nguyen in particular, the company has been
expanding its product export market to China. This is a place to help promote official
trade, creating conditions for many high-quality Vietnamese products and goods to be
consumed in the Chinese market.


3.

Economic environment
Economic growth and income growth

The country's economic growth rate suddenly dropped to 2.3% in 2020, from
6% in 2019, due to the impact of the COVID-19 pandemic. In 2021, growth returns to
strong at 8.1%. New sectors such as e-commerce and online financial services are
gaining momentum in an economy dominated by export-oriented industries.
However, the growth rate will only return to 3.2% in 2022. (IMF Economic and
Political Outlook, October 2022). GDP trends are expected to recover at 4.4% in
2023.


Nguồn: The world bank
China's GNI per capita (PPP) 2020 is 19,160.China is currently categorized as
being poor they are growing more rapidly than many developed nations and are
expected to become among the largest economies in the world
Income gap
China belongs to the group with the highest gap between rich and poor in the
world. 2% of the population accounts for 80% of society's wealth.The “China
Merchants Bank Annual Report” shows that China's wealthy account for 0.07%

holding 31.54% of assets. The middle class accounts for 2.05% and holds 50.58% of
assets. Ordinary people account for 97.88% and only hold 17.87 % of total wealth in
China).The main cause of the huge gap between the rich and the poor in China is the
problem of official corruption.Besides, the boom in technology is also a prominent
factor.
Economic relationship
Interest rate
In the current period, looking at the context of global economic risks
decreasing, many central banks around the world have cut operating interest rates.
Without exception, the Central Bank of China (PBOC) has cut the reserve
requirement ratio by 50 percentage points for all banks and 100 percentage points for


eligible municipal banks. The PBOC even cut the required reserve ratio at big banks
to 13%, which is expected to add 900 billion yuan ($126 billion) in cash flow into the
weak economy. macro indicators are less positive.
Inflationary

Weak domestic demand due to the impact of the Covid-19 epidemic also caused core
inflation in China to fall to the lowest level in a decade. Specifically, the core consumer price
index (CPI) only increased at an annual rate of 1% in February, the slowest pace since June
2010. Weak demand also makes businesses not dare to increase the selling price of goods. As
a result, the producer price index even turned down 0.4% in February compared to the same
period last year after increasing 0.1% in January.
4. Legal environment
Accept each other's laws
China's legal system is largely a civil law system. China’s legal system covers laws
that fall under seven categories and three different levels. The seven categories are the
Constitution and Constitution-related, civil and commercial, administrative, economic, social,
and criminal laws and the law on lawsuit and non-lawsuit procedures. The three different

levels are state laws, administrative regulations and local statutes.
In each country, the Civil Code is the basic law, covering the basic principles of civil
and commercial contracts. According to regulations, Vietnam and China both recognize the
principle of freedom of association, but also mention the interference and limitation of
freedom of association, assuming the principle of freedom of this subject is not infringed.
interfere with the freedoms or interests of other subjects in society. Vietnamese law and


Chinese law have similar provisions on contract change and scoring as well as contract
cancellation.
Signing of general agreement between Vietnam and China. For example, Agreement
on Mutual Legal Assistance in Civil and Criminal Matters, Agreement on Transit of Goods,
Agreement on Trade.
The government's attitude towards foreign enterprises
It can be said that China is currently "rolling out the red carpet" to welcome foreign
investors. Actively implement many measures to create more favorable conditions for foreign
investors in some pilot free trade zones (FTZs) and nationwide. 100% foreign ownership will
be allowed in quite a few sectors. China will also promote opening up in the service sector
and encourage foreign investment in manufacturing and high-tech industries, and in the
central and western regions of the country. Besides, the government also helps foreign
companies solve difficulties when investing in China. According to China's Ministry of
Commerce, foreign direct investment (FDI) in mainland China in January increased 14.5%
year-on-year to 127.69 billion yuan, equivalent to 14.5 billion yuan. $18.39 billion. Korea,
Germany and the UK are the 3 countries with the largest investment capital in China in 2022.
=> This is a good opportunity for Trung Nguyen to penetrate the Chinese market.
5. Cultural environment
Culture
According to a ranking from Chnbrand (China), Trung Nguyen Legend's G7 coffee
brand has become a popular instant coffee brand in the billion-people market, holding the
second largest market share in the e-commerce market. .

Product concept
As two neighboring countries with one river, Vietnam and China have quite similar
cultures in many aspects such as aesthetics, values, customs, attitudes, religion... This helps
Trung Nguyen easily. faster in market research and development.
Power distance


China has one of the highest PDIs in the world (80) indicating that inequality is
tolerable and decisions by superiors are more likely to be accepted without discussion. essay.
Therefore, there will be respect for superiors in the company, for the elderly and especially
harmony and politeness in the working environment. Therefore, assuming Trung Nguyen
sends a Vietnamese manager to run the branch in China, this person will not have too many
difficulties in human resource management and will also be respected by his subordinates.

Reference: hofstede-insights.com
Individualism
China is a highly collectivist culture (20), where people value cooperation and are
more comfortable working in groups than working independently. Therefore, Trung Nguyen
can allow its employees here to work in groups in research, marketing, sales, etc., which will
bring better work efficiency.
Traditional values
China is a market with a long tradition of tea drinking. However, in recent years,
Chinese people are tending to see drinking coffee as expressing a new style, replacing the
traditional practice of drinking tea, which is especially popular among young people.


Therefore, the fact that they have not yet formed the habit of drinking a certain type of coffee
will be an opportunity for Trung Nguyen to take advantage of introducing and positioning its
products.
6. Social environment

Population
China is the most populous country in the world with 1,450,980,405 people
(danso.org) as of March 8, 2023, or 18.12% of the total world population.

Reference: Danso.org
Age structure
0-14 years old: 17.29% (male 129,296,339 / female 111,782,427)
15-24 years old: 11.48% (male 86,129,841 / female 73,876,148)
25-54 years old: 46.81% (male 333,789,731 / female 318,711,557)
55-64 years old: 12.08% (male 84.827,645 / female 83,557,507)
65 years and older: 12.34% (81,586,490 male / 90,458,292 female)
Based on the age structure of China, we can see that the age group from 25 to 54
accounts for a large proportion (46.81%). These people are of working age, have a high need
to meet their friends and partners. On the other hand, young people tend to step away from


the traditional tea-drinking culture, so coffee is a popular choice. Therefore, Trung Nguyen
can choose this age group as the target customer.
●

Birth rate: 15.7 children/1000 people (2022)

●

Mortality rate: 11 people/1,000 people (2022)

●

Natural change = birth rate – death rate = 15.7 – 11 = 4.7 (2022)

●

Net migration rate: - 0.38 people/1000 people (2022)

●

Average life expectancy: 77.3 years (2022)

In recent years, China's population structure has shown a marked aging trend as the
number of children born is decreasing, the number of people of working age decreases, and
the proportion of elderly people is higher than the average. of the world.
Social trends
Coffee is gradually becoming a familiar beverage to Chinese consumers. However,
compared to other major coffee consuming countries, the Chinese market is at an early stage
of development, consumers still mainly use instant coffee. Therefore, this will be an
extremely potential market in the future.
7. Technological environment
China has become a big player in many high-tech fields such as artificial intelligence,
IoT, nanotechnology, biotechnology, quantum computing and big data...From 2002 to
present, on average every year This country has obtained more than 20,000 achievements in
the fields of energy, agriculture, and environmental protection... making its scientific and
technological capacity constantly improve. With 35 million people working in S&T fields,
China currently ranks first in the world in terms of S&T human resources. Due to being
denied access to advanced US technologies, China is accelerating the development of "Made
in China 2025" technologies.In 2021, China jumps two places to 12th in this ranking with
total R&D investment reaching a new milestone of 2.44% of GDP.
After the outbreak of the COVID-19 pandemic, the speed of digitization continues to
accelerate, and the shift from offline to online, especially personal shopping, is becoming a
habit of Chinese consumers. E-commerce systems such as Alibaba, Taobao, Tmall, JD,
YiHaodian…and e-payment are very developed and dynamic in China.

8. Ethics
Perspectives on child labor
China Labor Newsletter (China Labor Newspaper) in Hong Kong, an organization
that conducted an on-site survey in China, said that child labor is rife in the country. This is
becoming a more and more serious problem. There are no official figures on the number of
children working in the country.According to the United Nations, poverty is the main reason
why children enter the labor market at an early age. In China, many places have an alarming
level of poverty, even many parents "sell" their children to cover their ignorance or improve
their financial situation.
Environmental perspective
Along with the economic leap in the years 1990-2010 with an average GDP growth of
10.5%/year, China suffered from extremely serious environmental pollution. Emissionrestriction policies and water-reduction policies were banned in 2014 and 2017 Supply
tightening expansion. These policies greatly affect other countries because China is the
industry of the World. Applying environmental protection policies causes production costs in
China to increase, leading to an increase in the cost of finished products, thereby reducing the
competitiveness of imported goods, but goods are affected. in industries such as metal,
garment, plastic ...
Along with the government's tight environmental policies, Chinese consumers are
also very conscious of environmental protection when they are ready to strongly boycott
manufacturing enterprises that have a heavy impact on the environment water, air, and land.
Therefore, any enterprise entering the Chinese market must have a high sense of
environmental protection in order to be allowed to enter the market and be accepted by
consumers here.
Report the situation of corruption and bribery
Money-power transactions and the use of power to take advantage of the problem of
the "princeling party" elites using family power and power-hating relationships to control the
country's economic lifeline and distribute wealth Public property is a fairly common problem.
Evidence shows that, from the 18th National Party Congress in November 2012 to the end of

April 2022, nationwide disciplinary inspection and supervision agencies have investigated
4.39 million corruption and disciplinary cases 7 million objects.


9. Conclusion
Opportunity
The Chinese market has a diverse supply from nearly 80 countries, mainly from
Guatemala, Ethiopia, Vietnam, Malaysia, Brazil... According to statistics from the Vietnam
Coffee-Cocoa Association, China is always the market. Vietnam's large potential coffee
consuming market, especially from 2018 to now. From 12th place in 2018, to 2021 China is
Vietnam's 8th largest coffee import market.

Along with cultural similarities as well as a very large population, China is an
extremely potential market for Trung Nguyen. In addition, policies to attract foreign
investment and policies to protect foreign enterprises are strengths that help Trung Nguyen
easily operate in a large market like China.
Challenge
Nowadays, Chinese people tend to see drinking coffee as a new way to express their
style, especially young people in big cities. However, coffee companies around the world
consider China to be a "fatty" market, so the competition is increasing. Therefore, buyers will


have more choices. Besides, tea culture is still an indispensable part of Chinese people.
Therefore, in addition to having to compete with businesses from abroad, they have to
compete with famous domestic enterprises such as The Alley, Taiwan coco.

=> Today, the increasing number of coffee brands exporting to China causes huge
competitive pressure in the industry for the Trung Nguyen brand of Vietnam.
10. References
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