This week, David Cameron has been on a much publicised trip to Beijing with 100 representatives from British business – half of whom were from SMEs. One of the key aims of this trip was to help small and medium sized businesses from the UK capitalise on the significant export potential within China.
China has for some time been seen as a land of opportunity for many larger businesses, for example, Jaguar Landover exports more cars to China than any other destination. But for small businesses keen to capitalise on these opportunities, the market can seem overwhelming with over one billion people to target, and differing cultures and laws.
However, when dealt with diligently, these issues should not be seen as a barrier to export. Considering the following points will help put your business on the path to export success:
1. Boost home sales
Exporting goods to a new market shouldn’t be seen as a sticking plaster to mask poor UK business activity – exporting is usually only a success when it builds on a strong home-grown enterprise. Neither should companies see the Chinese market as a short-term fix; a long-term approach is required to make headway in the market, build a market and develop relationships with local suppliers and distributors.
2. Get a partner
For most, going solo in China, will not be a viable option; consider appointing an agent, a distributor or entering into a joint venture with a local business – an increasingly popular choice for SMEs.
3. Research, research, research!
China has over 100 cities, with a Government drive announced recently to push a further 250,000,000 rural inhabitants into these towns and cities over the next 12 years. A big market to target. Good research will help you figure out where your key target market is likely to live and work.
4. Check contracts
A clear and concise contract with international terms and conditions, as well as a good translation is essential. Consulting with a good commercial lawyer in the UK who has established contacts in China to assist locally will help ensure you are better protected if things do go wrong.
5. Check your exports are legal
Some products may be illegal in China, or require an import licence from the Chinese authorities or an export license from the UK authorities. Buying goods from China to UK
6. Protect your IP
Protection of intellectual property in China is considerably weaker compared to other jurisdictions and while the laws around this are improving, it’s essential to protect trade secrets and other IP with relevant registrations, non-disclosure agreements and confidentiality procedures.
7. Establish a web presence
As China doesn’t use Google and has its own search engine – Baidu, as well as its own social media sites, its vital businesses invest in establishing a strong local web footprint in China – using local help if needed.
8. Bribery Act
Corruption in China remains an issue, with the country recently ranked at number 80 out of 177 countries – with the UK ranked as the 14th least corrupt country. To ensure you’re not caught out by any issues relating to bribery and corruption, ensure you have a working knowledge of the UK’s Bribery Act which came into force in July 2011. This law means UK companies have to comply with UK standards (not foreign laws) and put in place a comprehensive anti-bribery policy which it should communicate to all its business partners, contractually requiring them to abide by its terms in all dealings with and for them.
Cameron’s trip underlines the UK government’s commitment to China and SMEs keen to grow internationally should look at China as one of the great future export opportunities for their global aspirations.
Neale Andrews is a partner and head of Mundays’ corporate and commercial team.
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