III.

ANALYSIS OF INTERNATIONAL BUSINESS SITUATION

A. Economic, Politic, and Legal Analysis of People’s Republic of China
1. Economic system, economic statistics, and foreign investments
China’s economy was not heard until 1978, under the command of Deng Xiaoping,

who was the Commander in Chief at that time. In 1978, Deng initiated his plan of

reforming the country, starting with the economy; he adopted the free market economy,

which is based on improving personal income, consumption. This change in the

economic system, created a huge never-satisfying monster that continues to grow in size

through the next 30 years, into 2009, with an average annual GDP increase of 10%. In the

short 30 years, China’s economy transformed from a virtually non-existing one into one

with the second largest GDP in the world (purchasing power parity wise). From 1981 to

2005, the poverty rate fell from 51% to 2.5%, thus making China the country with the

fastest growing economy the world has ever seen.

It was not until the late 20th century, did China open its doors and allowed foreign

investments, due to the mass number of available work force in China, which in 2008

was exceeding 800 million. By the end of 2007, China’s amount of foreign investment

reached $87 billion US dollars. However,

During the First and Second Five-Year Plans (1953-1962), the government was

promoting the construction of heavy industry; this action eventually caused the creations

of tones of un-specialized surplus steel products. And due to the fact that China’s old

policy was “maximize productivity by ignoring environmental concerns”, this policy

eventually caused China one of the greatest economic challenges. The environmental

damages China had caused are the most significant challenge, including notable air

pollution (the increase in green house gases), soil erosion and the harsher and unstable
winter temperature. Even though this challenge will not likely have any short term effect

on the people of China, it will cause millions of death in the long term, and because of the

“one child” policy in China, China’s population is likely to face a major decrease within

the next 30 to 50 years, where the environmental challenge will likely to occur and over

the long term, China will be helpless if this environmental problem does not improve.

Due to factual analysis, and appropriate assumptions, Spartan Internationals

predicts that China will be looking for a new way to power over 1.3 billion people’s

homes, which following an environmentally friendly and cost efficient way of producing

energy. At the current rate, China is consuming over 3 trillion kWh.

In 2007, the Chinese government is looking for a way that is environmentally

friendly and cost efficient to replace the energy production by coal or oil. Under the

command of the Premier Wen Jiabao, China increased the government effort into making

the environment a better place for the future generations, by officially publishing a report

of local environmental targets and national standard policies that focus on improving the

current environmental conditions.

The same environmental challenge also exist within heavy industrialized countries,

such as Germany, where industry productions take up over 30%, Australia with over

26%, and the United States with over 16%. This situation resulted in a perfect situation

for Spartan Internationals, where it will take advantage of the situation and starts to sign

contracts with each country’s department of energy and will starting rolling in money.