The Effects of China’s Social Infrastructure on Staples, Inc.
By Chris Lim
OMBA 606-D
Executive Summary
China’s social infrastructure consists of many different social aspects. And in China there are two primary societal factors that contribute to the needs of the Chinese people to live productive lives: education and health. For foreign companies, like Staples, Inc., they need to know how unique China is in regards to its demographics, the education of its people, the administration of health care for its citizens, its concern for the environment and its love for culture in order to be successful. Therefore, when a global company like Staples wants to consider going into a country like China it needs to assess whether or the state has a favorable social infrastructure that is adaptable, understandable and capable of lending to a foreign company’s survival and success, and that is China.
Introduction
China’s social infrastructure consists of many different social aspects. This is expected of the most populated state in the world, which happens to be one of the powerful global economies. It happens to be that China has experienced tremendous social, agricultural, and economic progress. The quality of life has improved dramatically in the past 30 years. China is the largest Communist state with the most dialects that make up the Chinese language, and the most diversity in so many social areas such as education, nationality, class, etc. (China.org.cn, 2003).
When analyzing a social infrastructure, such as China’s, there are so many aspects to examine. The analysis should begin with the demographics, the examination of China’s population in specifically its size, density, and distribution. Since China has a large, growing population it may be viewed as a market opportunity and definitely a source of inexpensive labor. On the other hand, a state like China could be viewed as potentially a high country risk especially if its people is not being adequately nourished and if the greater part of its citizens are young and unproductive. Thus, food and population factors have quite an impact on the state’s health. In regards to education services they happen to be a factor that will either make up or be made up of human capital, which consists of the knowledge, skills and abilities invested in an individual or an entire workforce. In this case, sufficient health conditions make for sufficient education conditions, which in turn lends to the knowledge and skills needed to have improved work output and economic development (Sullivan, 2001). Hence, it is apparent that a good social infrastructure is a key player in good economics. And in China, there are two primary societal factors that contribute to the needs of the Chinese people to live productive lives: education and health.
The purpose of this paper is to analyze the social infrastructure of China and how the key societal factors could directly influence any possible Staples, Inc. in China. The paper will include the demographic data, however it will primarily focus on the state’s major societal factors that can influence Staples, Inc. the most: education, health, along with work ethics, environment, and culture.
The Effects of China’s Social Infrastructure on Staples
After the analysis of the four following sectors of China’s social infrastructure it became evident that Staples, Inc. has to consider so many different facets of China’s social fabric. Included in this section are China’s demographic statistics, which helps to provide Staples a glimpse into China’s large population, and the recommendations that Staples, Inc. should consider if and when it ventures into China.
Demographic Statistics
Referring to China’s fifth (and most recent) national population census released on November 1, 2000, China has a population of 1,295,330,000 people. China is undoubtedly the most populated state with India at a close second. China has also grown since its population of 1,133,680,000, declared in its 1990 population census and this includes the relatively small population from the acquisition of Hong Kong. The increase is 132.15 millions people which is 11.66 percent over the past 10 years and the average annual growth rate was 12.79 million people (or a growth rate of 1.07 percent (China.org.cn, 2003). It has been projected that China’s population will reach 1,477,730,000 by the year 2050 (Populations.com, 2003). Another note is that China’s average person currently has a life span of 71 years of age, in the year 2000 (China.org.cn, 2003).
Employment
As China’s population continues to grow, so does the parallel growth in the employment sector. China experienced an employment rise from 650 to 730 million within the years 1990 to 2001, which signifies an 83 million job boost. Urban employment rose from 170.41 to 239.4 million, which signifies a 69 million, and rural employment rose from 477.08 to 490.85 million, which is a growth of 14 million. This demonstrates that China has been able to keep its employment constant. The 730 million employed people happen to represent the 60 percent of China’s total population. Looking at employment by industry it is revealed that the tertiary industry is the primary channel of employment. The share of employment in the tertiary industry increased from 18.5 percent in 1990 to 27.7 percent in 2001 while the share of primary industry decreased from 60 percent to 50 percent. The tertiary industry represents the employment of China’s citizens via the form of ownership, which demonstrates that the number of individual and private businesses is growing and has become a major force in employment expansion for China. This was in 1990 to 2001 that total employment, in both urban individual and private economic sectors, grew by 30 million, which signifies a 40 percent increase in China’s overall urban employment (China.org.cn, 11/12/2002). As a result, the number for rural employment is declining from 73.7 to 67.2 percent from 1990 to 2001, which is a 6.5 percent decline (China.org.cn, 11/12/2002). And most importantly, China is expected to keep its unemployment rate at around its current 4 percent after 2002 (China Daily, 11/12/2002).
What Staples should pay attention is how the employment by the urban and rural areas demonstrates that urbanization is growing when rural employment declines. This is definitely advantageous for Staples to know. Staples actually would bring employment wherever it lands itself and that is what the Chinese people are looking for, for a place of employment.
Education
The Chinese government has undeniably demonstrated its emphasis into the education of its people. Education is so deeply valued that in China’s rural areas those who are educated beyond what is equivalent to the high school level in the U.S. are considered to be very intelligent, and in the urban areas those with a collegiate education are considered very lucky and are highly esteemed individuals. One of China’s educational focuses is to further the education levels of their children. It was before 1949, pre-the People’s Republic of China (PRC), that 80 percent of the population were literate. Since then the reform of the educational systems has increased the number of students among China’s people. Today, 91 percent of China has implemented a compulsory primary education, almost 99 percent of school-age youth are students in these schools, the dropout rate has declined and the literacy of young and middle-aged people has increased by 7 percent. China views the education reform as the road to economic and social development (China.org.cn, 04/04/2001).
Another educational focus for China is on improving the literacy among its citizens. China vows to vanquish literacy among its young people between the ages of 15 to 24 with the tenth Five-Year Plan period (2001 – 2005) as stated by the Ministry of Education. China views this as a means to improve the quality of life for its citizens. Currently the illiteracy rate among China’s adults has been reduced from 22.23 to 8.72 percent in a 10 year-period. This is a feat when you consider that China still has an excess of 85 million illiterate adults in spite of the fact that 90 percent live in impoverished rural areas. Hence, the Chinese government placed a priority into to eliminating illiteracy among grown-ups and to popularize a nine-year compulsory education for school-age children throughout the entire state in 2001-2005 period. The Ministry plans to target different areas according to the actual situation in various regions in order to rid of illiteracy, and major efforts will be taken to advance the literacy drive in poverty-stricken areas, regions inhabited by minorities and among women. Another major step for the literacy is to promote continued study among those who have newly become literate in order for them to have the ability to enhance their cultural level (Xinhua News Agency, 03/04/2002)
For Staples, Inc., China’s national educational campaign and literacy drive can prove to be advantageous. China may have high illiteracy in the rural areas, but the urban areas seem to be entirely literate. China is demonstrating that there is a need for more continuing education and this is good for Staples, Inc, since it has corporate initiatives in place to partner with foreign friends to assist in contributing to the betterment of the disadvantaged youth, etc. Staples can use this to further its “Gifts in Kind International” program by allowing it to provide contributions to the disadvantaged youths and education-focused nonprofit groups within the Chinese communities that its future stores would be located (Staples, 2003).
Work Ethic
The Chinese people have always had what appears to be strong work ethics. Present day China can base its existence on a long civilization consisting of hardworking farmers, strong laborers and creative philosophers (Xinhuanet, 2003). Today, China’s people are growing more and more educated, as demonstrated earlier, and the value of a good education is ever-growing so is the need for people to become better skilled workers. China has also demonstrated how its people value the need to be employed in order to survive as well as to further the state’s economic and social development.
The positive work ethics of China’s people can definitely be a positive factor for a possible Staples store in China. The Chinese people could teach Staples what hard work looks like provided by the Chinese. The demonstrated hard work can appear to be very industrious. This would be a great learning experience for Staples, and the possible end-result would be enhanced work ethics for all Staples’ store employees throughout the world.
Health
Over the past thirty years, China’s healthcare system, throughout the entire country, has improved overall, thereby improving the overall health of its people. This road to good health began when China's legal status at the World Health Organization (WHO) was restored in 1972. It was in 1995 that 64 of China's health research institutions were finally designated as WHO cooperative centers. This brought the implementation of comprehensive birth control measures with the contraception as a mainstay for China. Since then China was awarded the population prize for family planning technical management and aristogenesis and good childcare. Then by 1998 China had 314,000 healthcare institutions, 2.914 million hospital beds and 5.536 million doctors and nurses. As a result, there were an average of 2.33 hospital beds and 1.6 doctors for every 1,000 people, and now it probably improved further. Even China's urban medical and disease prevention institutions have reached unexpected peak. Once upon a time it was very difficult to visit a doctor and to get hospitalized, now a significant ease has taken the place of difficulty (Xinhuanet, 2003).
Basically, the health standard of the Chinese people has been improved considerably. China’s national mortality rate has lessened from 30 people per 1000 in the early 1950s to the current 6.5 percent; the infant mortality rate, from 200 per 1000 to 33.1 per 1000; and the mortality rate of pregnant women and women in labor, from 1,500 per 10,000 to 63.6 per 10,000. Prior to becoming the PRC, China’s life expectancy of its people was averaged at 35 years of age. It was in 1996 that the life expectancy rose to 70.8 years. The life expectancy of women end up averaging to 73.04 and for men it became 68.71. This average life expectancy for the Chinese was eight years less than that of people from developed countries, but 10 years higher than that of people from other developing countries (Xinhuanet, 2003).
For Staples, Inc, its people should know that healthcare in China is relatively undeveloped versus what it is in the U.S., however it is important to keep in mind that China is still developing its healthcare system at what appears to be at a good pace. China must grow its number of hospitals, further educate and train more healthcare providers, etc. in order to continue to care for its growing population. Staples, should know that situations are still better in China then even in some of the other developing countries like India. The advantage for Staples is to possibly support China’s healthcare institutions, in order to assist with improving some of the healthcare services in China.
Environment
In China, its citizens are growing more aware of the environmental damage done by industrial pollution, reckless consumption of natural resources, etc. and the state has taken measures to minimize and control the effects. For instance, in the year 2003, China has made the control of pollutant emissions a top priority of its environmental protection departments. China has vowed to balance out industrial development and environmental protection by enforcing more comprehensive pollution controls in the year 2003 in order to further reduce the air pollution in China. Currently more than half of China’s cities, particularly ones with populations of at least one million people, were deemed to be smothered by dirty air due to coal burning, auto emissions and industrial production, assess by China’s National Center for Environmental Monitoring (Xinhua News Agency, 01/08/2003). Another instance of how much China is concerned with her environment is the fact that China has done so much, over the past few years, to bring back and maintain its wetlands because for a period of China’s history these precious areas were jeopardized by China’s rapid agricultural growth.
Since Staples, Inc is an global company that has made a it a point to be environmentally conscious, the company should find it to their benefit that China is working to preserve and clean up its environment. Staples works to preserve and recycle resources whenever possible (Staples, 2003) it should especially vow to practice those values when it should go into China. Basically, China’s environmental concerns would definitely benefit Staples especially if both the company and the state can work together to accomplish a few community-wide environmental projects.
Cultural
In terms of its cultural sector, China has become an international arts center. Since the 1980s, the state’s international cultural exchanges were not comparable to any other. Back in 1998, Yuan spent on entertainment, education and culture came in second subsequent to what was spent on clothing. It is forecasted that China’s possible spending in the cultural sector will reach 550 billion Yuan, (equivalent $66.4 billion) by the closing of 2005. Basically, becoming a cultural being in China has easily become the most effective way for one to become enriched and this symbolizes prosperity. The modern types of entertainment, like pottery and rock climbing, have become popular among young citizens, and holiday vacations are the best choices for families (Xinhua News Agency, 10/07/2002).
Staples could definitely use the fact that the Chinese citizen is hooked on the cultural advancement. Staples stores could offer cultural incentives and awards to its customers for shopping there and this can done in the form of sweepstakes or by shoppers’ membership benefits, etc.
Conclusion
For foreign companies, like Staples, Inc., they need to know how unique China is in regards to its demographics, the education of its people, the administration of health care for its citizens, its concern for the environment and its love for culture in order to be successful. Therefore, when a global company like Staples wants to consider going into a country like China it needs to assess whether or the state has a favorable social infrastructure that is adaptable, understandable and capable of lending to a foreign company’s survival and success, and that is China.
REFERENCES
China Daily (November 12, 2002) Job Prospects Grow Brighter. Retrieved Online January 23, 2003 from http://service.china.org.cn/link/wcm/Show_Text?info_id=48511&p_qry=china's%20and%20unemployment
China.org.cn (2003) Education. Retrieved Online January 23, 2003 from http://service.china.org.cn/link/wcm/Show_Text?info_id=4328&p_qry=work%20and%20ethics
China.org.cn (2003) China – Quick Facts. Retrieved Online January 23, 2003 from http://www.china.org.cn/e-changshi/index.htm -
Xinhua News Agency (January 8, 2003) Pollution Control Remains China’s Top Environmental Task. Retrieved Online January 23, 2003 from http://www.china.org.cn/english/environment/52992.htm
China.org.cn (November 12, 2002) Labor and Social Security Profile. Retrieved Online January 26, 2003 from http://service.china.org.cn/link/wcm/Show_Text?info_id=48647&p_qry=china's%20and%20unemployment
Populations.com (2003) Retrieved Online January 23, 2003.
Staples, Inc. (2003). Retrieved online January 25, 2003 from www.staples.com
Sullivan, J. J. (2001). Exploring international business environments. Boston, MA: Pearson Custom Publishing.
Xinhua News Agency (October 7, 2002) Cultural Market Booming in China. Retrieved Online January 23, 2002 from http://service.china.org.cn/link/wcm/Show_Text?info_id=45054&p_qry=China's%20and%20modern%20and%20culture
Xinhua News Agency (March 4, 2002) Ministry of Education Sets Target for Literacy Elimination. Retrieved Online January 23, 2002 from http://service.china.org.cn/link/wcm/Show_Text?info_id=28034&p_qry=literacy