Environmental Scanning of Hong Kong

PEST
Demographic:
The population of Hong Kong is estimated to be 7,298,600 with a average growth
rate of 0.8%. Also, the domestic household in Hong Kong increased from 2389000 in
2012 to 2484900 in 2015 and the average domestic household size remains 2.9 for
three years starting from 2012.
Since our key customers are children who aged from 4 to 14, the proportion of
children in Hong Kong would be essential to us. According to the census and
statistics department in Hong Kong, the birth rate increased from 57100 in 2013 to
62300 in 2014.
Also, the fertility rate of Hong Kongs women also increased from 1.124 in 2013 to
1.234 in 2014.
These trends show that more people in Hong Kong are willing to give birth. With the
increasing number of children, it would provide opportunities for us to increase the
sales rate due to the enlargement of our key customers.

Economic:
The GDP of Hong Kong keep increasing. From USD 193.54 billion in 2006 to USD
290.9 billion in 2014 which reflects an economic growth. Also, the main industry of
Hong Kong would be the wholesale and retail trade, restaurants, and hotels
industries as 43.3% of labor force in Hong Kong.
As a result, it would be easier for us to recruit people with full of service experiences
and communication skills which are important to our customers service operations.
In addition, The unemployment rate remains 3.3% of the labor force between 2012 to
2015 and the average monthly salary of Hong Kong people is about HKD 14877 with
an increasing trend. At the same time, the inflation rate decreased from 5.2 in 2014 to
2 in 2015. With a good economic condition, it may increase the willingness for
families to spend more money for entertainment and education of their children.

Political:
According to the world bank, the political stability index (2.5: Strong, -2.5 weak) was
about 1 in the previous few years which means that Hong Kong has a lower chance
to have terrorism.
Also, the legal system of Hong Kong is complete since its rule of law index (2.5
:Strong,-2.5 weak) keep exceeding 1.5 which reflects Hong Kong s legal system is
sound enough to extend Kidzania business due to the high quality of contact
enforcement and protection of property rights.

Although the spending of Hong Kong government on education decreased from

23.8%in 2009 to 20.3 in 2013, the education spending of Hong Kong exceed many
developed countries including the USA and UK with 14% of government spending in
education in average. It shows that Hong Kong government as well as the society
emphasis on education.
In addition, the tax rate of Hong Kong is lower compared with most of the developed
countries. For example, the corporate tax rate of Hong Kong is 16.5% which is much
lower than 21% in UK and 26.5% in Canada.
These factors provided Kidzania a suitable political environment to begin its
business.

Culture:
In Hong Kong, 93.6% would be the Chinese people and Chinese culture would be
the main culture in Hong Kong. Different from other cultures, most of the Chinese
parents hope one's children will have a bright future and value on the achievement of
their children.
The term Tiger Mom is used to describe the Chinese parents good at raising kids
than western parents which raised from the book Battle Hymn of Tiger Mother
written by Amy Chua.
Also, according to the research done by the Hong Kong federation of youth groups,
there are more than 50% of primary and secondary students has participate in the
tutorial lessons.
The popularization of the tutorial classes for secondary and primary students in Hong
Kong. reflect that parents in Hong Kong emphasis on their childrens education and
willing to spend extra money for their children. Especially when the average
household size in Hong Kong is 2.9, this means that every family would be having
one child for average. As a result, most of the parents resources concentrate on one
child.
Technology:
In Hong Kong, every one hundred citizens would subscribe as much as 239.3 mobile
phones which shows that every Hong Kong people have more than two mobile
phones in average. This phenomenon is having an increasing trend since it raised
from 123.89 in 2005 to 239.3.
Also, the internet subscribers in Hong Kong remains above 2,200,000 in the previous
4 years which reflects the dependence of internet of Hong Kong people.
Since Hong Kong peoples living habit is close with mobile phones and internet, there
would be more channels for us to perform the promotion asks, for example,
Facebook or discussion boards which can help us to enter the Hong Kong market
with a lower advertisement cost compared with the usage of the traditional media.

Competitors:
Although Hong Kong can provide us a good business environment, there are strong
competitors. Disneyland and Ocean Park would be our largest direct competitors
since they are providing customers a intangible entertainment experience and their
target market would be more widen than us including teenagers and families.

Different from Disneyland and Ocean Park, our main value is not only the
entertainment but also providing our key customers the educational values and our
key customers are more specific to be children aged from 4-14 as well as their
parents.