INTERNATIONAL BUSINESS

Contents
Introduction of current business in Malaysia: .............................................................................................. 3 Introduction of the chosen country: ............................................................................................................. 4 PESTLE analysis ............................................................................................................................................. 5 Political-legal factors ................................................................................................................................. 5 Rules of law ........................................................................................................................................... 5 Regulations efficiency ........................................................................................................................... 5 Trade policy ........................................................................................................................................... 5 Taxation system .................................................................................................................................... 5 Economic factor ........................................................................................................................................ 6 GDP ....................................................................................................................................................... 6 Inflation rate ......................................................................................................................................... 6 Unemployment ..................................................................................................................................... 7 Labor cost .............................................................................................................................................. 7 Balance of Payments Account in Hong Kong ........................................................................................ 7 Social-Cultural environmental factors ................................................................................................... 7 Language ............................................................................................................................................... 8 Food ...................................................................................................................................................... 8 Religion.................................................................................................................................................. 8 Technological ............................................................................................................................................ 8 Mode of Entry: ............................................................................................................................................ 10 Recommendation:....................................................................................................................................... 11 Conclusion: .................................................................................................................................................. 12

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Executive summary:
The following part will discuss and analyze the environment of the country that I have choose, which it Hong Kong, in which investors from another country can invest. A good external analysis will be carried out in order to observe the political, legal, economical, technological, social and legal situation of the country. And then I discussed about the mode of entry and mentioned the risks, costs and benefits. At last I give some recommendation in order to make the decision making for opening international business. As a marketing manager for Hadramawt restaurant I am going to make the PESTLE analysis in order to give some recommendation in terms of operating a business in Hong Kong.

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Introduction of current business in Malaysia:

Hadramawt restaurant is an Arabic and Malay food, considered to be one of the most successful restaurants in Malaysia due to the variety of food that the restaurant offers between the Arabic and Malay dishes. Hadramawt Restaurant is conveniently located in the heart of Kuala Lumpur, in the area of Bukit Bintang and the Pavilion. Adequate vehicle parking space is available behind the Chulan Square building. The restaurant has worker from Arabic countries and Malay worker. Hadramawt (M) Sdn Bhd (Restaurant & Catering) provides customers from all races and background to enjoy casual dining in our exclusive restaurant. Appreciate the enjoyable kindness service we are known for, all in a relaxing environment. Indulge in our huge variety of Arabic and Malay dishes that you won't find elsewhere in Malaysia. Our menu offerings consist of many traditional of traditional Malay and Middle Eastern food, drinks and desserts. The choices consists Appetizers, BBQ, and Arabic Food, so there is a dish to suit everyone. Our prices are amazingly affordable considering the gourmet Middle Eastern cuisine that we serve, and the prime location that we are in. Our restaurant ambiance is very much influenced mixed by Arabic and Malay concept, with designed and carved wooden motifs, colorful lights, carpets and images that resembles the original Hadramawt town. The restaurant comfortably accommodates 100 customers and is ready for either private dining, functions, or simply hanging out. To accommodate diners, we have free Wi-Fi and a spacious open area for smoking shisha.

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Introduction of the chosen country:

Hong Kong was born of the "opium war" (1839-1842) fought between the United Kingdom and China. As an impact of this war, Hong Kong was ceded to the British. In 1860 the British Obtained ownership of Kowloon on the Chinese mainland, and in 1898 they were granted a 99-year rental on an area of the mainland known as the New Territories. The rental expired on July 1, 1997.On that time China again assumed political control of Hong Kong and developed it a unique administrative region (SAR). As an SAR, Hong Kong enjoys a fair level of autonomy. It has own legislature, economic freedom, free-port position, and an individual taxation system. Hong Kong will enjoy these rights until 2047. However, China has made it clear that it will encourage its own political will on Hong Kong.

Capital city: Surface area: Population: Official language(s):

Hong Kong 1,092 sq km 7.1 million Chinese, English

Head of State: Head of Government:

President HE Mr Hu Jintao Chief Executive The Hon Donald Tsang Yam-kuen

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PESTLE analysis
Political-legal factors
Rules of law

The effectiveness of the legal system promotes respect for the rules of law. The constitutional framework provided by the Basic Law, the protection of private property rights and freedom of exchange. The judiciary is independent of influence from the executive. Additional institutionalized by effective anti-corruption measures, promotes government integrity.
Regulations efficiency

The regulatory environment is highly supportive of business efficiency such as restaurants and other legal business intension. Business freedom and labor freedom is high. With no minimum capital required, launching a business takes only three days. The impact of installing a statutory minimum wage has been relatively subdued, also the labor productivity far exceeding the low minimum wage rate enforced in 2011. Monetary stability is well maintained, although inflationary pressures have increased. The government controls all land.
Trade policy

Hong Kong is a free port which thrives on free trade. Its open door policy has enabled it to become one of the world's biggest trading economies and an international financial and commercial center serving the Asia-Pacific region and the Mainland of China. Furthermore, the free trade policy means Hong Kong sustains no barriers on trade. Hence, Hong Kong does not charge tariff on exportation or importation of goods. Export and import licensing is also kept to a minimum.
Taxation system

One of the most preferred destinations for foreign owned companies, entrepreneurs and investors for several decades now, Hong Kongs taxation policies only adds to the attractiveness of the city for foreigners. While the corporate tax rate in the city has a maximum limit of only 16.5 per cent one of the lowest in Asia companies do not have to pay tax on foreign-source income, even if remitted to Hong Kong. Apart from corporate and individual income taxes, there are no other taxes in Hong Kong.
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Economic factor
In 2012 Hong Kong was report to be the worlds most developed financial market by the World Economic Forum, an independent international organization and being named worlds freest economy in the 2012 Index and got 89.9 score. However, in its annual Doing Business report, the World Bank declared Hong Kong the easiest country to start a company and the first easiest do to business. GDP (2010) $ 224.1 billion (at the current market prices) GDP real growth rate (2010) 6.8% Per Capita GDP (2010) $ 31.709 billion (at the current market prices) Natural resources: Deep water harbor

Industry, Textiles, clothing, electronics, plastics, watches, clocks. Trade (2010) Exports- $ 388.6 billion: clothing, electronics, plastics, watches, clocks and other goods
GDP

The Gross Domestic Product (GDP) in Hong Kong expanded 0.3 percent in the fourth quarter of 2011 over the earlier quarter. Traditionally, from 1990 until 2011, Hong Kong's standard quarterly GDP Growth was 1.02 percent reaching a chronological high of 6.30 percent in September of 2003 and a record low of -3.60 percent in March of 2009.
Inflation rate

Hong Kong's inflation rate increased to its highest level in almost three years, fuelled by soaring housing costs and food prices. The city's consumer price index grew up 5.6% in June from a year ago, the highest rate since July 2008, and beyond 5.2% in May. Besides that, inflation visibly up,

INTERNATIONAL BUSINESS but stabilized towards year-end. In figure 4 shows food and housing are the two main sources of inflation for the 2012 and it illustrates that inflation for the food is really high.
Unemployment

Hong Kongs unemployment rate was reported at 3.3 percent from December of 2011 to February of 2012. Not only that, the higher-skilled workers percentage is 1.6%, its lesser than lower-skilled workers which is 3.4%.
Labor cost

Until recently, there was no statutory minimum wage in Hong Kong. However, in July 2010 on the minimum wage decision was adopted by the Legislative Council, which came into force on statutory minimum wage HKD28 per hour, the rate recommended by the recently established Commission minimum wage, on May 1, 2011. Previously, Hong Kong faced with high labor costs are among its major competitors in East Asia at present. This high labor costs could seriously undermine Hong Kong competitive position in the world. While the high cost of labor is an important factor affecting the competitiveness of the economy, almost equally important efficiency levels, the economy.
Balance of Payments Account in Hong Kong

A BoP account is an integrated statistical statement of an economy's external transactions with the rest of the world. The BoP account released here contains detailed breakdowns for both the current account and the capital and financial account.

Social-Cultural environmental factors

Culture of Hong Kong - a unique, multi-faceted and unusual, formed by centuries-old fusion of Eastern and Western traditions. European culture is firmly rooted in Hong Kong and continues to exist harmoniously with Chinese traditions, even after the return of Hong Kong, China.

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Language

Hong Kong is a place that is well known for the combination culture of West and East. The authorized languages in Hong Kong are Chinese and English. Though, the mother tongue for the majority of its people is Chinese but because of the long tradition of English education method and its cultural introduction, lots of locals can speak very well in English as well.
Food

Hong Kong Culinary Capital of Asia, which can offer a variety of specialties - local or from abroad. Since Hong Kong is influenced by two cultures, the local cuisine is also characterized by a combination of Eastern and Western flavors and tastes. In addition, the local population diversity of the ethnic composition is different, so you can savor not only from different parts of China, but also from around the world.
Religion

Hong Kong has a multicultural population with Chinese, Muslims, Christians, Jews, and Hindus, each with their own set of beliefs and philosophy.

Technological
Hong Kong's industries in certainty do extremely well at certain technological areas like innovation, application commercialization and industrial engineering, which are backed by a technology cluster, composed of local as well as foreign enterprises in the territory. According to
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INTERNATIONAL BUSINESS the case studies on Hong Kong's electronic components, information, electronics manufacturing service and communications technologies (ICT) and environmental protection sectors, Hong Kong Trade Development Council (TDC) organizes this Forum to assess Hong Kong's position as a platform for technology cooperation, while classifying elements that are encouraging to technology cooperation between foreign/Chinese mainland enterprises and Hong Kong organizations. One of the quick growing and important markets for Hong Kong companies on environmental technologies and related services is Mainland China. It is predictable that as much as RMB1375 billion will be invested for environment protection in the Mainlands Eleventh Five-year Plan (2006-2010). Nowadays, Hong Kong's citizens use octopus card, its not a credit card, and it more like a bus pass. Behold Hong Kongs octopus card! In Hong Kong, 90% of all traveling is done by mass transit: 7 million daily riders have access to an octopus card, used by 95% of Hong Kongs population, which is accepted as currency not only for the various forms of mass transit but also at parking meters, convenience stores, and fast-food restaurants. Hong Kong is widely regarded as having the best blueprint of a successful mass transit system.

Possible Risks:
In fact, the strength of China has strengthened Hong Kong's economy in multiple ways. However in Hong Kong domestic economic risks remain. IBTimes journal said the growth of income and wealth inequality may cause to social tensions. Moreover, they noted that the entire economy of Hong Kong "hinges largely on the asset management market and is dominated by easy monetary conditions. If capital ever flows out of Hong Kong to other regions, its economy could tank in the near-term. Hong Kong's economic view is generally positive, given its proximity to China and role as a regional financial powerhouse. However, its economic openness leaves it vulnerable to the risk of economic downturns and financial crises. For now, there is no risk to do business in Hong Kong, but according to the Li Hao from IBTimes journal (2011) could be economic risks which can effect to the business.
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Mode of Entry:
A mode of entry into a global market is the channel that organization employs to gain entry to a new global market. Hong Kong is the culinary capital of Asia, housing a large choice of restaurants which offer dishes from all over the world. Eating out is the country's activity. Hence, the Hong Kong Food and Drinks market is efficient, with a strong market for the restaurant business. There are numerous method of entry that can be used to get into the market, based on the nature and the objective of business. Many kinds of business require licenses to operate in Hong Kong, as well as functions offering food, drinks or cigarettes, suppliers, telecommunications, retailers, and some other types of companies. (PBTG, 2011) therefore, to open a restaurant business in Hong Kong need to obtain license. There are some licensing requirements which must be adhered to in order to set up a Hadramawt restaurant establishment in Hong Kong. To open a branch of Hadramawt restaurant where food and drinks are provided, need to obtain a 'General Restaurant License' from the Food and Environmental Hygiene Department (FEHD). Moreover, to sell alcohol then an alcohol license is needed from the alcohol Licensing Board. (Guide Me HK, 2011).

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Recommendation:
As a marketing manager of Hadramawt restaurant, I would like to recommend for investors to set up business in Hong Kong in the restaurant industry. There are a number of reasons why I choose Hong Kong and why it must be restaurant industry. Firstly, why Hong Kong is best place for doing business, because is one of the world's most open and highly effective economical techniques. In 2010 Truly Hong Kong's actual economical quantity of growth improved to 6.8%. The most interesting part for foreign organizations integrated in Hong Kong is the fact that foreign sourced income is definitely tax free. Hong Kong, a supporter of free-market policies and low corporate taxes as well as the entry to the world's most populous nation, is the best place to do business, according to data composed by Bloomberg. (Simon K., 2012). Restaurant is a more appropriate business for Hong Kong, as I mentioned previously, people like to eat delicious dishes and tourists can spend a significant amount of money to eat well in awesome restaurant. Hong Kong is identified as the 'Culinary Capital of Asia'. In 2005, Hong Kong's visitors spent US $ 1.25 billion in restaurants, worth 17% of Hong Kong's HRI business. Hong Kong has around 11,000 restaurants. Chinese restaurants dominate the Hong Kong restaurant sector, accounting for 45% of the industry (USDA, 2005c). Finally, in Hadramawt restaurant must be two dishes such as Malay and Arab. Hog Kong population is considered as a mix population, a lot of Asian people are living there and most of them like Middle East and Malay food. So, easy to open two cuisines in one restaurant, it will be more profitable, and will attract more customers.

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Conclusion:
Hong Kong, Asia's most popular city for international business is city that works. His appeal is built on a solid political stability of the business governance, rule of law and independent judiciary, free-market principles, free flow of information, and English as the language of business. In Hong Kong there are 11,000 restaurants; 36 million visitors arrived to Hong Kong in 2011. It says that Hong Kong best place to setting up Hadramawt restaurant business which consists of Malay and Middle East foods. Moreover, cost of living in Hong Kong is high, so most suitable to open middle class restaurant and most perhaps it will be profitable. Based on research, PESTLE analyses of the Hong Kong will help to understand political position, economic situation, social life and technological environment and environment and legal factors. And how it will helps the Hadramawt restaurant to make the fast decision in operating a branch in Hong Kong.

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The references:
Hong Kong introduction by (CIA, 2013) online form [https://www.cia.gov/library/publications/the-

world-factbook/geos/hk.html] accessed: 5/14/2013

Religion in Hong Kong by (InterNations worldwide, 2013) online for:

[http://www.internations.org/hong-kong-expats/guide/15908-culture-shoppingrecreation/religion-in-hong-kong-15922] accessed: 5/13/2013 Pest analysis by (study mode, 2013) online from: [http://www.studymode.com/subjects/pestanalysis-hong-kong-page1.html] accessed: 5/14/2013 Pest Analysis Hong Kong Ocean Park Tourism Essay by (UK Essay, 2010) online from: http://www.ukessays.com/essays/tourism/pest-analysis-hong-kong-ocean-park-tourismessay.php accessed: 5/13/2013 PEST Analysis by (The Hong Kong Times, 2011) online from: [http://sites.cdnis.edu.hk/students/100106/2011/03/31/pest-analysis/] accessed: 5/13/2013 Entry Modes into Foreign Markets by (Sabine Amend, 2009) online from: [http://manzanosbusinessblog.blogspot.com/2009/02/entry-modes-in-forein-markets.html] accessed: 5/12/2013 Market Entry Guide Hong Kong by (Luxembourg for Business, 2010) online from: [http://www.luxembourgforbusiness.lu/market-entry-guide-hong-kong] accessed: 5/15/2013

International Business Review, (December 2011) Easy Zealand a business-Friendly place, International Business Review, page- 115.

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Ricky Griffin and Michael Pustay, (2010), International Business, 6th edition, Pearson Education, Inc., publishing as Prentice Hall. Pages: 62-63 Daniels D., Radebaugh Lee., etc. (2009) International Business Environments and Operations, 12th Edition, Pearson Education, Inc., publishing as Prentice Hall. Page 800. United States Department of Agriculture (USDA) Foreign Agricultural Service (2006b) Hong Kong Market Development Reports Exporter Guide 2006, GAIN Report HK6025.

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