1) Political Factors i.

Constitutional System China or Peoples Republic of China adopts socialist system or communism in their political system in their decision-making processes in governing the country. The countrys sole political party in power is known as the Communist Party of China. The government have the sole power to control all activities done by their citizen as what have been describe in how communism system worked in governing a country. In other words, the purposes of working in China are to contribute to the nation and also to the government as the government control on all activities in the country. ii. Stability of Government The stability of the China government is quite moderate and stable because the administration of the government are not publicize to the public either through the press or on the internet. So, the degree of the citizen involvement in the politics is low because of the heavy restrictions impose by the government. However, the policies impose and the law regulations are quite effective in terms of economy where China is one of the leading countries in the world. In the recent years (2001), China has joined the World Trade Organization and results rapid growth in industrial and manufacturing sectors because of the cheap labor in China. But still problems such as managing environmental degradation, demographic pressure and the extreme immigration from rural to urban area must be faced by the government. iii. Business Freedom The business freedom in China is quite tight because of the regulation impose by the government where they restrict businesses from other countries coming in. But recently, China government open their gate to the outside world to set up business in their country. It takes 37 days to start anew business in China compared to the world average 38 days. While it takes 1.7 years from the filling for insolvency in court until the resolution of distressed assets. Examples of business freedom in China are supermarketization and opening market to foreign multinationals company because of

the entry of China into WTO. Supermarketization is where the government shuts down the traditional wet market and transform them into supermarket. iv. Trade Freedom In the past few decades, China loosen their trade policy to the outside world in their trading, export and import industry. Chinas weighted average tariff rate was 3.9 percent in 2008 based from the web (heritage.org). Factors that affect the cost of trade freedoms are import and export bans and restrictions, import and export licensing, non-transparent tariff classifications, complex regulations and standards, subsidies, state trading in certain goods, services market restrictions, issues involving the protection of intellectual property rights, and inconsistent and corruption-prone customs administration add to the cost of trade. So, Chinas trade freedom score to account for non-tariff barriers deducted about twenty points. v. Tax Policies Below are the economic data for China. Tariff Rate Income Tax Rate Corporate Tax Rate GDP (billion) GDP per Capita Unemployment Rate Inflation Rate FDI Inflow (millions) Tax Burden % GDP Government Expenditure % GDP Population (billions) 3.9 45.0 25.0 7900 5962 4.2 5.9 108300 18.3 19.9 1300

Based on the rates and statistic given, we can see that China has moderate Corporate Tax Rate and high Income Tax rate. The government encourages more newtechnology business in the market besides allowing foreign institution enters the nation financial institution in providing foreign currency. Because of lower corporate tax rate, many MNC started to open their business in China and the numbers of FDI have increased rapidly. Furthermore, on October 2008, new policies impose where

individual income tax is no longer paid on interest on bank deposits. The overall tax revenue as a percentage of GDP was 18.3 based on what recorded in the recent years. 2) Economic Factors Economic Freedom Score 51.0

Population GDP (PPP)

1.3 billion

$7.9 trillion, 9.0% growth, 11.0% 5-year compound annual growth, $5962 per capita 3.9 45.0 25.0 7900 5962 108300 18.3 19.9

Tariff Rate Income Tax Rate Corporate Tax Rate GDP (billion) GDP per Capita FDI Inflow (millions) Tax Burden % GDP Government Expenditure % GDP

Unemployment Inflation (CPI) FDI Inflow

4.2% 5.9% $108.3 billion

i. Disposable income of buyers ii. Credit accessibility

The government has directly and indirectly controls their banks and financial institution. Investment done in China are also control and regulated because of their judicial system is very vulnerable to the political issues and influence iii. Unemployment rates Labor force 812.7 million

Labor force by occupation a) agriculture (39.5%) b) industry (27.2%) c) services (33.2%) Unemployment rate 4.2% (2008 est.)

*Official data from urban area only. *Including migrants may boost total unemployment to 9%. *Substantial unemployment and underemployment in rural areas. Source from www.cia.gov iv. Fiscal Freedom China has moderate Corporate Tax Rate and high Income Tax rate. The government encourages more new-technology business in the market besides allowing foreign institution enters the nation financial institution in providing foreign currency. Because of lower corporate tax rate, many MNC started to open their business in China and the numbers of FDI have increased rapidly. Furthermore, on October 2008, new policies impose where individual income tax is no longer paid on interest on bank deposits. The overall tax revenue as a percentage of GDP was 18.3 based on what recorded in the recent years. v. Monitory Freedom

From 2006 until 2008, the inflation rate is around 5.2% where it is consider moderate for that particular percentage. As what mention where China economic freedom score is around 51 from the full score 100. So, we can see that the economic is a mixture of free market and control market. The price of product sold can be determined by the quantity demanded of the product. But still the government intervenes on certain goods and products to maintain stability of the prices. The government also gives subsidies to small business and industry to compete with foreign goods where they can sell at lower prices. vi. Investment Freedom Chinas Foreign Investment Catalogue describe that different foreign investment are group under different types such as encouraged, prohibited, restricted and permitted China laws and regulatory are non-transparency, complex and inconsistently enforced laws and regulations, weak protection of intellectual property rights, corruption, industrial policies protecting local firms, and a legal system that cannot guarantee the sanctity of contracts where these must be face by the foreign investor. Financial transactions are also tightly regulated. vii. Financial Freedom The financial systems in China are control directly to the government and it is tightly controlled. In China, there are supervised roughly 5,600 financial institutions in 2008 and
China has only two private banks while there are four state-owned banks account for over 50 percent of total assets. This financial system is control and supervised by

The China Banking

Regulatory Commission. viii. Interest rates Central bank discount rate Commercial prime lending rate ix. Inflation Inflation rate 5.9% (2008 est.) and -0.7% (2009 est.) 2.79% 5.31%

Inflation rate decline vastly from 2008 until 2009 because of the stable currency of China. 3) Social Factors Population Population growth rate Population Below Poverty Line Infant mortality rate Life expectancy at birth total population: 71.44 years male: 69.71 years female: 73.26 years (2004 est.) Total fertility rate : 1.79 children per woman (2009 est.) : : : : : 1.34 billion (2009 est.) 0.66% (2009 est.) 2.00% (2009 est.) 20.25 deaths per 1,000 live births (2009 est.)

Ethnic groups : Han Chinese 91.5%, Zhuang, Manchu, Hui, Miao, Uyghur, Tujia, Yi, Mongol, Tibetan, Buyi, Dong, Yao, Korean, and other nationalities 8.5% (2000 census) Nationality Chinese : noun: Chinese (singular and plural) adjective:

Religions : Daoist (Taoist), Buddhist, Christian 3%-4%, Muslim 1%-2% note: officially atheist (2002 est.) Languages : Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect), Yue (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects, minority languages (see Ethnic groups entry) Literacy: total population: 90.92 % male: 95.14 % female: 86.53 % (2004 est.) HIV/AIDS - Adult Prevalence Rate : 0.10% (2009 est.)

Source from http://globaledge.msu.edu/countries/china/statistics/

i.

Distribution of Wealth Distribution of income or consumption by percentage share :

Lowest 10% : Lowest 20% : Second 20% : Third 20% Fourth 20% : :

1.80% 4.66% 9.00% 14.22% 22.13% 33.06% 49.99%

Highest 10% : Highest 20% :

Source from http://globaledge.msu.edu/countries/china/statistics/ China has an extreme gap between the lowest 20% and the highest 20% after 60 years China change their system in their economy. ii. Changes in lifestyles and trends Lifestyles and trends in China change in many ways such as the level of consumption, attitude towards new product especially from the west, changes in the quality of life, and also changing from quantity satisfaction to quality satisfaction. Besides that, changes in trends can be seen from the degree of fashion sense where citizen tend to buy more colourful and striking colours compare dull- coloured clothes. iii. Educational levels The literacy rate for China is around 91.0% was able to read and write at a specified age. While the average years of schooling is 11.2 year. Education expenditures in China is about 1.9% of the GDP. iv. Labor Freedom Ranks

Chinas labor regulations hinder overall employment and productivity growth. The non-salary cost of employing a worker is high. Dismissing an employee may require prior consultation with the local labor bureau and labor union. v. Freedom of corruption Corruption is perceived as widespread. China ranks 72nd out of 179 countries in Transparency Internationals Corruption Perceptions Index for 2008. Corruption affects banking, finance, government procurement, and construction most severely, and there is a lack of independent investigative bodies and courts.

vi.

Property Rights Chinas judicial system is weak, and many companies resort to arbitration. Local officials can ignore court decision with impunity. All land is state-owned, but individuals and firms may own and transfer long-term leases (subject to many restrictions) as well as structures and personal property. Intellectual property rights are not enforced effectively. Copyrights, patents, brand names, trademarks, and trade secrets are routinely stolen.

4) Technological Factors i. Science and Technology Through the period, the achievement of science and technology in China are remarkable where they manage to achieve many discoveries in the science field. The major achievements are the discovery of the Daqing Oilfield, building the first atomic reactor, successful testing of atom and hydrogen bombs, synthesis of crystalline insulin, positron and negatron electronic collider, nuclear power stations, carrier rockets, and satellite launching technology. Rapid improvement in science and technology also create more jobs in the manufacturing industry and also make the quality of life better and easier. ii. Research and Development

The government design many plans and strategies in developing the R&D industry. Many programs to enhance R&D industry are launched such as the Torch Program and the Scaling Heights Program 5) Environmental Factors i. Environmental Protection Laws The government takes serious matter on protecting the environment where they impose many regulations and laws in protecting, preventing and controlling industrial pollution and improving urban environment. The government also collaborate with many NGOs in order to maintain the mother nature. 6) Legal Factors i. Employment Regulations Chinas labor regulations hinder overall employment and productivity growth. The non-salary cost of employing a worker is high. Dismissing an employee may require prior consultation with the local labor bureau and labor union. PESTEL analysis for Finland Outlined below is the PESTEL analysis for Finland as a whole. 1) Political Factors i. Constitutional System Finland joined the European Union in 1995 and adopted the euro as its currency in 1999. The country is sparsely populated, with about one-fourth of its land mass above the Arctic Circle, but boasts a modern, competitive, and transparent economy with vibrant information and communications technology sectors.
ii.

Stability of Government. The modern and competitive Finnish economy has long benefited from high levels of economic freedom. The economy remains a world leader in business freedom, trade

freedom, property rights, and freedom from corruption. Private enterprises continue to blossom and promote innovation in an efficient regulatory and legal environment. With prudent and sound banking practices, the financial sector has weathered the global financial turbulence relatively well. Finlands overall high level of economic freedom is curbed by high government spending and the rigidity of the labor market. As in many other European social democracies, high government spending (close to half of Finlands GDP) supports an extensive welfare state. Restrictive labor regulations undermine employment and productivity growth. Previously robust economic growth slowed in 2009 due to the global recession, and Finland, like many other European nations, faces demographic challenges in the form of an aging population and shrinking workforce that could threaten future growth and the governments ability to maintain generous social spending programs. Finland became a member of NATOs Partnership for Peace program in 1994 but has not pursued full NATO membership because of its neutral military status. iii. Business Freedom The overall freedom to start, operate, and close a business is strongly protected under Finlands regulatory environment. Starting a business takes an average of 14 days, compared to the world average of 35 days. Obtaining a business license requires much less than the world average of 18 procedures and 218 days. Bankruptcy is straightforward and not costly. iv. Trade Freedom Finlands trade policy is the same as that of other members of the European Union. The common EU weighted average tariff rate was 1.3 percent in 2008. However, the EU has high or escalating tariffs for agricultural and manufacturing products and its MFN tariff code is complex. Non-tariff barriers reflected in EU and Finnish policy include agricultural and manufacturing subsidies, quotas, import restrictions and bans for some goods and services, market access restrictions in some services sectors, nontransparent and restrictive regulations and standards, and inconsistent regulatory and

customs administration among EU members. Ten points were deducted from Finlands trade freedom score to account for non-tariff barriers. v. Tax Policies Below are the economic data for Finland. Tariff Rate Income Tax Rate Corporate Tax Rate GDP (billion) GDP per Capita Unemployment Rate Inflation Rate FDI Inflow (millions) Tax Burden % GDP Government Expenditure % GDP Population (billions) 1.3 30.5 26.0 188.2 35427 6.4 3.9 -4200 43.1 47.3 5.3

Finland has moderate tax rates but a relatively high level of overall taxation. The top income tax rate is 30.5 percent, with municipal rates between 16.5 percent and 20 percent. The top corporate tax rate is 26 percent. Other taxes include a value-added tax (VAT), an inheritance tax, and a flat 28 percent tax on capital income. In the most recent year, overall tax revenue as a percentage of GDP was 43.1 percent. 2) Economic Factors Economic Freedom Score 73.8

Population GDP (PPP)

5.3 million

$188.2 billion 0.9% growth 3.2% 5-year compound annual growth $35,427 per capita 1.3 30.5 26.0 188.2 35427 43.1 47.3 5.3

Tariff Rate Income Tax Rate Corporate Tax Rate GDP (billion) GDP per Capita Tax Burden % GDP Government Expenditure % GDP Population (billions) Unemployment Inflation (CPI) FDI Inflow 6.4% 3.9% -4200.0 million

i. Unemployment rates Labor force 2.678 million

Labor force by occupation Agriculture and forestry: 4.5% Industry: 18.2% Construction: 7.3% Commerce: 15.9% Finance, insurance, and business services: 14.5% Transport and communications: 6.9% Public services: 32.7% Unemployment rate 6.4%

ii. Fiscal Freedom Finland has moderate tax rates but a relatively high level of overall taxation. The top income tax rate is 30.5 percent, with municipal rates between 16.5 percent and 20 percent. The top corporate tax rate is 26 percent. Other taxes include a value-added tax (VAT), an inheritance tax, and a flat 28 percent tax on capital income. In the most recent year, overall tax revenue as a percentage of GDP was 43.1 percent. iii. Monitory Freedom Finland uses the euro as its currency. Between 2006 and 2008, Finlands weighted average annual rate of inflation was 3.1 percent. As a participant in the EUs Common Agricultural Policy, the government subsidizes agricultural production, distorting the prices of agricultural products. It also imposes artificially low prices on pharmaceutical products. Ten points were deducted from Finlands monetary freedom score to account for measures that distort domestic prices. iv. Investment Freedom Finland is open to foreign direct investment. Certain acquisitions of large companies may require follow-up clearance from the Ministry of Trade and Industry. Non European Economic Area investors must apply for a license to invest in security, electrical contracting, alcohol, telecommunications, aviation, and restaurants. Regulation is relatively transparent and efficient. There are no exchange controls and no restrictions on current transfers or repatriation of profits, and residents and nonresidents may hold foreign exchange accounts. Restrictions on the purchase of land apply only to non-residents purchasing land in the Aaland Islands. v. Financial Freedom Finlands sophisticated financial system provides a wide range of services, guided by sound regulations and prudent lending. There are more than 300 domestic banks, but three bank groups (Nordea, OP Bank Group, and the Sampo Group) dominate the

system. The government owns about 14 percent of the Sampo Group. Banking is open to foreign competition, and about 60 percent of assets are foreign-owned. Capital markets determine interest rates, and credit is available to nationals and foreigners. The stock exchange is part of a BalticNordic exchange network. Merger of the Financial Supervision Authority and Insurance Supervisory Authority came into force in January 2009. The impact of the global financial turmoil on the banking sector has been relatively muted. vi. Interest rates Central bank discount rate - 1.75% (31 December 2009) and 3% (31 December 2008) * this is the European Central Bank's rate on the marginal lending facility, which offers overnight credit to banks in the euro area Commercial bank prime lending rate3.51% (31 December 2009) 5.79% (31 December 2008) vii. Inflation Inflation rate 3) Social Factors - 0% (2009 est.) 4.1% (2008 est.)

Population Population growth rate

: :

5.25 million (2009 est.) 0.10% (2009 est.) : 0.00% (2009 est.)

Population below Poverty Line Infant mortality rate Life expectancy at birth : :

3.47 deaths per 1,000 live births (2009 est.)

Total population: 78.71 years male: 75.30 years female: 82.30 years (2004 est.) Total fertility rate : 1.73 children per woman (2009 est.) Finn 93.4%, Swede 5.6%, Russian 0.5%, Estonian 0.3%, Roma noun: Finn(s) adjective: Finnish

Ethnic groups : (Gypsy) 0.1%, Sami 0.1% (2006) Nationality :

Religions : Lutheran Church of Finland 82.5%, Orthodox Church 1.1%, other Christian 1.1%, other 0.1%, none 15.1% (2006) Languages : Finnish 91.2% (official), Swedish 5.5% (official), other 3.3% (small Sami- and Russian-speaking minorities) (2007) Literacy: total population: NA % male: NA % female: NA % HIV/AIDS - Adult Prevalence Rate : 0.10% (2009 est.)

Source from http://globaledge.msu.edu/countries/finland/statistics/

i.

Distribution of Wealth Household income or consumption by percentage share: lowest 10% : lowest 20% : second 20%: third 20% : fourth 20% : highest 10%: highest 20%: NA% NA% NA% NA% NA% NA% NA%

ii.

Changes in lifestyles and trends

Doesnt have many changes in lifestyles and trends since Finland are counted as one of the modern countries.

iii.

Educational levels The education levels in Finland are very good where the literacy is 100% for both male and female. The average school life expectancy is 17 years.

iv.

Labor Freedom Ranks Burdensome labor market regulations hamper employment opportunities and productivity growth. The non-salary cost of employing a worker is high, and dismissing an employee can be costly. Restrictions on work hours are rigid.

v.

Freedom of corruption Corruption is perceived as almost nonexistent. Finland is tied for 5th place out of 179 countries in Transparency Internationals Corruption Perceptions Index for 2008. Finland is a signatory to the OECD Anti-Bribery Convention. The Council of Europes Group of States against Corruption has recommended that Finland sharpen its controls over political financing and increase the transparency of donations to political parties and election candidates.

vi.

Property Rights Property rights are well protected, and contractual agreements are strictly honored. The quality of the judiciary and civil service is generally high. Expropriation is unlikely. Finland adheres to numerous international agreements concerning the protection of intellectual property.

4) Technological Factors i. Science and Technology

Technology and innovation policy measures seek to contribute to enhancing the competitiveness of Finnish industry and the well-being of society, with the aim of making Finland capable of providing companies with a top-flight innovation environment internationally, which also attracts foreign R&D investments. Thus, at the beginning of its term, Prime Minister Vanhanens second government intends to prepare a National Innovation Strategy. ii. Research and Development R&D funding will be increased to 4 per cent of Finlands gross national product. This funding will be allocated to centres of strategic excellence in sectors that are pivotal to the development of the national economy, society and citizens welfare. The regional innovation base as well as co-operation between business communities and education and research communities will be strengthened through a Centre of Expertise Programme that consists of cluster-based networking. 5) Environmental Factors i. Climate Cold temperate and potentially subarctic but comparatively mild because of moderating influence of the North Atlantic Current, Baltic Sea, and more than 60,000 lakes. ii. Current issues Air pollution from manufacturing and power plants contributing to acid rain, water pollution from industrial wastes, agricultural chemicals; habitat loss threatens wildlife populations. 6) Legal Factors i. ii. iii. Employment Regulations Health and Safety Regulations Trade and Regulations Standards

Why do you think Finland tops the chart for overall ranking of the Best Countries in The World? Finland tops the chart for overall ranking of the Best Countries in the World because it is a small country and the population of the country is small. So, it is easier to manage either in terms administrative, economy, health, law and many more. Finland adapt free market in their economy so the demand and supply fluctuate freely and the entry barriers to the country is quite low. Besides that, Finlands trade policy is the same with other members of the European Union. Inflation rate is also low in Finland while unemployment rate is quite high. Although the unemployment rate is high in Finland, the quality of life is still good because workers in Finland must pay high income taxes where from this taxes, the government used the taxes to give fund to those who are unemployed. Every month government will give them the fund to their bank account. Wealth distribution is also distributed quite equally among the citizens where the gap is not that big among the low income and high income. Besides that, the climate and weather also take effect to the ranking where the weather is quite calm and because of the geographic area where it is situated far north in the globe. So, around 10 weeks in a year the sun will not set during the summer.