Introduction
The report analyzes the Saudi Basic Industries Corp. (SABIC) operations in the Chinese market. Ii is known as the Saudi diversified manufacturing company. However, the SABIC company is specialized in providing fertilizers, metals petrochemicals, chemicals, industrial polymers, etc. It is known that SABIC is the fourth-largest polypropylene manufacturer company in the world, and it is the largest public company that is present in the Middle East and Saudi Arabia; moreover, the company is also listed under Tadawul, the Public Investment Fund of Saudi Arabia has owned about 70% of its share. It is concerned that SABIC business unit is also operating in Asia. However, there are Innovative Plastics since 2011 at focused on the Chinaplas. There is also the new production line in the Shanghai and Nansha, China. It is analyzed that company SABIC is getting dynamic growth in the key plastics sectors and there is consumer electronics effectiveness in the versatile material technologies (Dawei, 2018).
SWOT Analysis
Strengths
- In the Chinese market, it is considered a market leader, and there are benefits of joint ventures.
- The strength is also related to the needs of customers as the company is fulfilling the market needs, for example fertilizer manufacturing and aircraft manufacturers.
- With the production of advanced thermoplastics, polyethylene, methanol and fertilizers, and other 17 dedicated technologies, SABIC in the China market, addressing diverse customer base.
- The company in China has opportunities to sell the producing the chemical and fertilizers.
- The company presence and distribution are strong in the Chinese market (Gnana, 2018).
Weaknesses
- There is the high dependency of the natural, and feedstock that is non-renewable
- SABIC is facing issues related to the sublicensing overcharging issues.
- However, in China, there are issues of the weak supply chain.
Opportunities
- Focus on the growth in China as in the sectors of Agri-nutrients and specialty manufacturing.
- There are also acquisition opportunities (Dawei, 2018).
- There are various opportunities for the company in the Chinese market as China is a hub for clean energy, transportation, medical devices, etc. so that our chances to grow.
- SABIC can also collaborate with the companies in China so that pursuing innovation there can be growth journey.
Threats
- Risks related to climate pricing
- Volatile energy pricing
Challenges Faced by SABIC In Chinese Market
Political Challenges
It is analyzed that SABIC is facing political challenges in China and there is a chance in the increase of policies issues there are bigger challenges that are political. As their issues concerned with monetary policy and there are instructed commercial banks. Moreover, there is increased lending in the excessive industrial capacity because the chain is the country that makes policies for its own benefit. It is known that in China SABIC may not get the success shortly because the aspects related to the corruption, income inequality can be seen in the country. China has the party governance and therefore, there are also domestic issues, which involve corruption and bribery. It can be noticed that SABIC can face issues in regard to political situations (Blitz, 2018).
Economic Challenges
It is analyzed that SABIC is facing political challenges in China as mostly there are short-term economic problems. SABIC, in the economic situation, faces the issues of the economic hard landing, and the growth began to slow down. However, as in the country, there are shrinking of the export markets because China prefers own companies. There is the focus on excess industrial and residential investment. However, it is analyzed that SABIC in the China can face the global downturn shortly and it can be more difficult to stay or get success in the country because of the rise in domestic inflation. There is also a surge in the prices (Blitz, 2018).
Cultural Challenges
SABIC is currently facing political challenges in China as there are issues in the strategic planning because there are companies in China that are gaining more market share than SABIC. As analyzed that there are companies in China that have a better quality of material, however, SABIC in this way, nit focuses on the innovation as well as on the modern capitalism. Therefore, it is analyzed that SABIC needs to focus on the valuing relationships, strategies as well as the planning and innovation so that company able to maintain networks based on the trust and value-adding in the country (Lanteigne, 2015).
Legal Challenges
For the legal challenges, it is known that SABIC may face legal challenges in China. However, currently, SABIC has fulfilled the registration as well as the licensing requirements; that allowing the company to do business in China. It is also known that legal situations are favorable for SABIC. However, the business scope is less based on the foreign exchange regulations because the country prefers its own industries and companies rather than focusing more on the imports. SABIC needs to do expense on the tax and import duties, and there is a need to make compliance with the labor law compliance so that there may not be issues (Lanteigne, 2015).
Conclusion
It can be concluded in the report that SABIC in the China can face the issues in the future, if not effectively respond to the challenges, as the company currently facing the challenges and there can be more issues in the future. The company is high-performance towards the market demand. However, it needs to be noticed that the SABIC can step towards the innovation practices so that there could be a success in the Chinese market. Moreover, it is analyzed that timely compliance with laws and effectively responding to weaknesses through focus more on opportunities can provide success to SABIC in the Chinese market.
References
Blitz, D. (2018) To Understand China’s Economy, Look to Its Politics, 7 June, [Online], Available: https://www.ineteconomics.org/perspectives/
blog/to-understand-chinas-economy-look-to-its-politics [5 November 2018].
Dawei, K. (2018) Saudi Arabia’s SABIC Joins Race to Supply China With Plastic, 12 September, [Online], Available: https://www.caixinglobal.com/2018-09-12/saudi-arabias-sabic-joins-race-to-supply-china-with-plastic-101325320.html [5 November 2018].
Gnana, J. (2018) Sabic signs agreement for large petchems complex in China, 11 September, [Online], Available: https://www.thenational.ae/business/energy/
sabic-signs-agreement-for-large-petchems-complex-in-china-1.769219 [5 November 2018].
Lanteigne, M. (2015) Chinese Foreign Policy: An Introduction, Routledge.
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