Chinese new year: trade tips

Country fact file

  • The country has a population of more than 1.3 billion people and the second largest economy in the world. In early 2009, the UK and China took steps to strengthen business ties, building on the rapid growth in bilateral trade which saw UK exports to China rise by almost a third.
  • George Osborne recently announced his intention to make the UK a leading offshore trading centre for the renminbi, highlighting the opportunity for Britain to prosper from China’s growing role in international currency markets.
  • China posted GDP growth of 8.9 per cent in the last quarter of 2011.
  • China is the second largest trading nation in the world and the largest exporter and second largest importer of goods. 
For smaller companies, deciding to trade in China can seem overwhelming, especially as the import/export regulations are myriad.

How do I start trading?

1. Research your target market

It’s essential to research overseas markets before you start to market, promote and sell your product or service there. For example, sales in the Chinese luxury retail market grew by 27 percent in mainland China in 2010, making it the world’s third largest luxury market and amounting to nearly 40 per cent of the US luxury market according to recent research. The market presents major opportunities for a luxury goods retailer looking to expand – but make sure your product differentiates itself in what can be an overcrowded market. More practical issues also need to be explored such as route to market, logistics, regulation and local resellers.

2. Planning is everything

You’ll need a structured export plan. Define how you will enter the Chinese market and find trade leads. Decide how to ship your goods and use a logistics or delivery partner who has experience of the market. Note that some carriers may quote a rate that is just one component of the total cost; without taking into consideration the cost of collection in the UK or the preparation of declaration and customs charges (in the origin and destination country).

3. Financing

Exporting can also be financially demanding; make sure that working capital is in place at every stage of the cycle, with extra costs such as transport and insurance taken into consideration. The wait for commissions, orders and payments may also take longer than in the domestic market.

4. Customs and regulation

Every country has different customs regulations. China’s customs legislation is especially complex. For example, it is forbidden to import US beef products to China, and all shipments other than personal effects must be sent to a company rather than an individual.

5. Seek help and advice

UK Trade & Investment (UKTI) offers a range of services for UK exporters, including a flexible business tool called the Overseas Market Introduction Service (OMIS). The British Chambers of Commerce (BCC) also offers export training services. DHL Express can provide information around customs rules and regulations that govern overseas markets. It has been operating in China since 1986 in a 50/50 joint-venture agreement with Sinotrans (China National Foreign Trade Transportation Corporation) – a large Chinese transport corporation with interests and activities stretching across all transport modes, including sea, air and ground.

Neil Kuschel is sales director at DHL Express UK & Ireland

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