China Energy Industry – Porter’s Five Forces Strategy Analysis
In recent years, China has emerged as one of the greatest consumers of energy in the world. In fact, combined with China's rapid economic development, the country has also put in place favorable policies to attract investment in its energy sector, including an overall restructuring of the energy industry as well.
In recent years, facing a shortage of energy supplies, China has also turned to developing the renewable energy sector such as wind, solar, geothermal and tidal power. There is no doubt that the Chinese energy industry is one of the biggest energy markets in the world, and is expected to remain so in the coming years as well.
Aruvian Research analyzes the Chinese energy Industry in Michael Porter’s Five Forces Analysis. It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macro-environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.
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