International Business: The Feasibility of XXB Gulf Energy investing in China through a Joint Venture

| May 19, 2014

The gaps in market, economic conditions political will between China and GCC presents an opportunity for investment. The analysis of Chinese international business environment using PESTEL model, diamond model and Porters Five Forces, recommends the XXB Gulf Energy to invest in China and particularly Inner Mongolia. In the last three decades, industrial growth characterizes Chinese economic growth and increased energy demand. Due to global warming, Chinese government has turned to renewable energy and particularly wind energy.

Although, the current consumption in of wind is 0.4 percent, it estimated that the wind reserve in China could provide over 18 times the consumption demand witnessed in 2005. There is high demand for turbines both at Chinese and international markets. China is endowed with cheap labor and market (because of high population), materials (steel and iron), infrastructure (airports, roads) and technology. In addition, China has prevailed a good environment for foreign entities; for instance, in Inner Mongolia, the companies operating over 10 years are refunded part of their taxes – full amount of the first five years and a quarter of the following five years. In addition, firms in energy sector are not charged land rates during development period.

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