Trading with China

Posted on by Cindy Yip

Estimated read time: 4 mins

34 per cent of companies interviewed in a recent survey saw China as the biggest market with export potential.  It’s clear to see that China will have a big part to play in the future expansion plans of British companies, with imports and exports to and from China already increasing.

Export to China

So why is China becoming such a popular market to trade with?

  • China is currently the second biggest economy in the world with predictions it will take over the US by 2020
  • One in ten tourists worldwide are Chinese
  • Chinese tourists spent a total of $129 billion in 2013
  • 70% of the population shop online at least once a week
  • 55% of China’s smartphone user have made a mobile payment

Opportunity for SME’s

As the middle and upper class continue to develop and disposable income becomes more readily available, there will be increasing opportunities for UK companies to supply products and services.

Online and mobile purchase is becoming increasingly popular with a high demand for foreign, high quality, luxury items. There’s also a big focus on authenticity, which is good news for British companies as the UK are globally renowned for quality, heritage and design innovation. This creates the perfect demand for UK products and services.

It may sound like you have to be an internationally recognised brand to succeed but as long your product or service is authentic and of good quality, there’s an opportunity waiting out there for you.

Reviews and word of mouth are a big influence on Chinese consumers buying decision, even more so than the UK. This means unless you have established connections and networks in China, a good way to start would be through a local partnership.

Challenges for SME’s

Setting up in China is a lengthy process and the traditional export routes which would work in other countries are likely not going to for China. Getting your foot into the country can be very difficult and expensive with many requirements to fulfil beforehand.

There are lots of legal requirements and conditions that need to be met before you can establish your presence in the country such as gaining a Chinese business license.

If you plan on having a website in China, you’ll also need to register for an Internet Content Provider license (ICP). Also bear in mind, there is a strict restriction on many social media sites so the typical channels you would use in the UK may not be available in China.

The language is completely different to English, with many different dialects spoken in different parts of China. Unless you’re familiar with the local language, you’ll most likely need the services of a native translator both for verbal and written communication.

Depending on the location you plan to sell in China, as it’s so big, shopping habits and buying processes will differ from region to region. Rural areas prefer bargains where prices are so low even discount retailers from Western nations can struggle to compete. They’re also heavily reliant on assisted sales so consider what kind of customer service you want to be offering.

 

The Government provide a useful piece of document regarding overseas company risk on key security and political risks UK companies might face when operating in China which can be found here: https://www.gov.uk/government/publications/overseas-business-risk-china

 

All statistics and information from Business and Industry and Internet Retailing

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