EU And Asia And China

Question 1

Effects of the Single Market on UK Businesses (positive impacts)

Answer 1

• Since 2004 businesses selling in the single market now have access to more than 450 million consumers – this increases market share and brand awareness
• Eases mergers and joint ventures between national companies, eg the purchase of Powergen (UK company) by E-On (German Company)
• Reducing trade barriers allows cheaper trading which may lead to increased sales due to products being cheaper
• Reduction in paper work needed to trade saves time and money
Access to new sources of labour supply may lead to reduced costs
• Fewer delays waiting to get exports through customs posts meaning products can be delivered to customers quicker which improves customer satisfaction

Question 2

Effects of the Single Market on UK Businesses (negative impacts)

Answer 2

• Altering products to meet new EU safety/environmental standards increases costs

Question 3

• Impacts of growing Chinese/ASEAN economies for UK businesses (positive impacts)

Answer 3

• The investment China provides to UK businesses is expected to pass £105 billion ($170 billion) in the emerging energy, property and transport sectors by 2025. In 2012, China
Investment Corp, the country’s sovereign wealth fund, bought an 8.68 per cent stake in Thames Water Utilities Ltd and a 10 per cent stake in Heathrow Airport Holdings. This allows these companies to grow and offer a better service which can attract more customers.
• Raw materials from ASEAN/China may be cheaper due to lower wage rates/lower production costs in these countries. China does not have a national minimum wage, but sets a minimum per region. The average minimum wage in Shanghai is £2.67, compared to £8.21 in the UK (as of September 2019).
• Newer technologies - owing to its vast size, and population ASEAN/China have access to newer technologies, allowing for better quality products to be manufactured and used in UK production processes.
• Large market - China has a population of 1.4 billion people, with ASEAN adding another 380 million, meaning UK businesses have a larger market in which to export their luxury goods.
• Technology transfers - UK businesses can learn from the production processes of ASEAN/Chinese businesses. Chinese companies investing in the UK will bring the lessons they have learned with them, resulting in a technology transfer to UK businesses.

Question 4

Impacts of growing Chinese/ASEAN economies for UK businesses (negative impacts)

Answer 4

• Corporate culture - cultural differences could be make trading with China/ASEAN nations problematic as UK businesses may be unfamiliar with local customs and cultures. The Chinese are very respectful people, and do not appreciate tardy appearances or time keeping.
• Buying power - the buying power of Chinese businesses may leave UK businesses vulnerable to a takeover. A Chinese firm bought out pizza Express in July 2014 and there have been rumours that Tate and Lyle may be vulnerable.
• Price wars - the wage and manufacturing costs of products coming out of Asia are much below that of the UK. As a result, UK businesses may have to lower their prices to compete with Chinese/ASEAN businesses.
• Language and currency differences may make it difficult and time consuming to work with Chinese nations.
• Transport costs - with a distance of almost 5000 miles between China and the UK, transportation costs will be high. Importers must also take account of the time taken to transport. As environmental awareness increases, less consumers want UK businesses to trade with Asia, given the increased carbon footprint of doing so.

Question 5

Effects of single market on the UK (positive)

Answer 5

• Since 2004 businesses selling in the single market now have access to more than 450 million consumers - this increases market share and brand awareness
• Eases mergers and joint ventures between national companies, eg the purchase of Powergen (UK company) by E-On (German Company)
• Reducing trade barriers allows cheaper trading which may lead to increased sales due to products being cheaper
• Reduction in paper work needed to trade saves time and money
• Access to new sources of labour supply may lead to reduced costs
• Fewer delays waiting to get exports through customs posts meaning products can be delivered to customers quicker which improves customer satisfaction

Question 6

Effects of single market on the UK (disadvantages)

Answer 6

• Altering products to meet new EU safety/environmental standards increases costs