When Theresa May met Chinese Premier Li Keqiang back in January this year, all reports suggest that the meeting was a glowing success. Some £9 billion in deals are expected to have been signed between the two nations as they discussed future trade and investment opportunities between China and the UK.
Indeed, a new ‘golden era’ of trade relationships was entered, as coined and branded by former PM David Cameron.
Later in the year at an Asia-Europe summit in Brussels, Mr Li went as far as to remark in reference to May that ‘your visit to China in January was a big success. We enjoy this golden era and usher in a diamond era’.
So all the platitudes and warm words aside, just how important is the Chinese market to the UK? And vice versa?
Well, China is the UK’s fifth largest export market (by country) with the Asian powerhouse spending over £22 billion last year on British goods and services. Imports, meanwhile, from China were worth over £45 billion according to Office for National Statistics data.
A huge trade deficit for sure, but a vitally important market for the UK establishment and businesses moving forward as a post-Brexit business world takes shape.
And things are headed in the right direction. British exports to China have grown nearly 65% since 2010, despite some stagnation in the last two years.
If China is on the export hitlist for your company, there are some things to consider before entering the market. China may indeed be the largest e-commerce market on the planet, but that doesn’t mean just moving some product into the country will see your firm earn its fortune.
Here are five considerations.
China isn’t just one market
There are often huge regional differences in both business and local government priorities in China, as well as with consumer trends, habits and traditions. So a ‘one size WILL fit all’ approach is more likely to end up costing you money than earning a profit.
A more tailored and staggered approach can, therefore, provide better results by getting to grips with one city or region first before expanding outwards from a successful base.
There are two versions of the Chinese currency
Crucial for exports, China has two versions of its currency with split usage between domestic transactions and international trade. CNY is used locally and is managed by the People’s Bank of China, whilst CNH, used for international trade, is freely tradeable and the two can diverge in value.
Exporters can lose as much as two or three per cent in sales value in some cases, so figuring out whether to use the ban instead of a currency broker to handle exchange rates is well worth considering before beginning export operations in the country.
Appreciating cultural sensitivity will go a long way
Alongside differences in the general populous’ culture, traditions and religions, there are also strong business cultural traditions that go with doing business in China.
This is especially prevalent in business meetings when meeting potential partners, distributors or wholesalers. You can expect to be wined and dined, but understanding the decorum will go a long way to forging long-lasting inter-business relationships. For example, its traditional for the host to offer three toasts before the guest can then offer one of their own.
Getting an introduction will go a long way too
Naturally true of any export venture, but especially due to the distance and cultural differences between Europe and Asia, getting an introduction really can go a long way in helping gain access to desired markets, meetings with critical buyers and gaining trust in the country as a trusted supplier, seller or manufacturer.
CEO of Brandauer, Rowan Crozier advised that: “Our approach has been to develop relationships with UK and European customers that have a footprint in the Far East. As they get to know you and, more importantly, trust you as a technology partner, the opportunities will come.”
British products are in high demand
The ‘Made in Britain’ tag really does carry gravitas in China with both consumers and businesses. It inspires trust in business and is indicative of quality and reliability with consumers, especially in designer goods, fragrances and clothing – even baby formula.
Only Germany and Netherlands export more to China in the EU than the UK, so demand is high but there’s certainly scope to grow.
If your business has set its sights on China as part of its export strategy in the future, or you’ve already begun operations in the country and require additional specialist support, find out how our export consultancy can help spearhead your export growth today.