New CBBC Podcast: Your China Start-Up Guide
Kiran Patel, CBBC's Senior Director - Commercial, speaks to Joe Cash on some of the ways successful SMEs in China have overcome these hurdles, particularly now travel to and from the country is difficult.
China can be a complex and challenging market for new exporters. While the country holds huge potential for small and medium sized (SMEs) companies from across a wide of sectors, for sure, getting your company in front of China’s 1.4 billion consumers will first require you to get to grips with a raft of market barriers and its regional diversity. This can be tricky.
For a start, not all of the issues that commonly afflict SMEs looking to break into the China market are immediately obvious. But if your business is at a stage where you are ready to export, and you have innovative consumer products, technologies or services, the China market is open for you to explore and should be on your radar for a variety of reasons.
First, China’s middle class will exceed 400 million people in the coming decade, ensuring strong potential consumer demand both now and in the pipeline. Examples of industries that are maturing and British exporters should be paying closer attention to, as a result, include apparel, cosmetics, homeware, food and drink, childrenswear, and mother and baby products.
Secondly, the country’s policy environment is encouraging, too. As China continues to pursue its 14th Five Year plan, British companies possessing innovative technologies and solutions that enable industrial upgrading and green transition in the manufacturing sector stand to benefit from efforts to make Chinese industry more sustainable, for example. CBBC has been working extensively with business parks, free trade zones and economic and technological development zones across China that have a genuine interest in working with British companies in sectors as diverse as healthcare and the life sciences to food processing.
Furthermore, policymakers understand the importance of China retaining its attractiveness as a destination for continued international investment. And CBBC regularly inputs into government reviews of legislation such as the Foreign Investment Law and other stimulus initiatives.
And yet, despite these clear plus points, direct engagement with China remains difficult. Travel to China is particularly challenging, for one, but there are many other broader ramifications of its zero Covid policy. That said, at this point, it is important to reinforce that if you are seeking to invest and grow your business in China in the interim that you can work with partners or representatives on the ground that you can trust.
For a start, manage your employees carefully. Ensure to take a hands-on approach when recruiting staff and establishing commercial cooperation mechanisms, such as a joint venture partnership. Conducting appropriate due diligence is of the utmost importance.
If it is currently your aim to develop your business in the market further, but you do not have resources on the ground in China, you may wish to consider CBBC’s China Navigator solution or Launchpad. Both of these services have been used extensively by British businesses to either assess the market and identify partners and suppliers or, as is the case with Launchpad, recruit staff that you can trust.
From the outset when establishing a partnership with a supplier, distributor, or business partner, CBBC would advocate some initial due diligence to:
- Firstly, verify that your target’s incorporation matches the narrative conveyed in your business discussions;
- Understand the scope of business on your target’s business licence to ensure that they are qualified to deliver for you;
- Clarify their size, capacity to deliver, and physical address;
- Have a clear level of visibility of your target company’s trading history and knowledge of any administrative, financial or trading penalties on their record with the bureau of industry and commerce if any;
- Know who their shareholders, board members, and key personal are and to qualify that the leadership of your target company are ethically sound;
- Ascertain that your partner has all the appropriate licenses in place to deliver in compliance with the laws of the PRC.
Finally, it is important to have access to reliable information on the business environment and economic factors including policies for key sectors, local regulations which vary from city to city and province to province, IP protection issues, setting up in China or simply understanding local business culture for how to communicate more effectively with clients and partners – especially when unable to meet in person.
These all areas that CBBC and our extensive network of members can offer support on. If you are seeking guidance, our team can speak with you directly and where required refer you to a wealth of expert practitioners in our membership. Please email Membership@cbbc.org for more details.
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The views expressed in the China Business Brief podcast are those of invited contributors and not necessarily those of the China-Britain Business Council ('CBBC'). We do not accept any liability if the podcast is used for an alternative purpose from which it is intended, nor to any third party in respect of this podcast.