The Small Business Guide to China: How small enterprises can sell their goods or services to markets in China
By David Howell
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About this ebook
China is not, though, simply the factory of the world. As the Chinese economy has developed, so has its population, with an estimated 8.5 million Chinese citizens migrating to urban areas each year in search of work and a better standard of living. As a result, the market for your business' goods and services is inexorably growing.
But can small businesses really compete in this vast market? It's a question that many small business owners are asking themselves.
The Small Business Guide to China looks at not only how the Chinese economy works and what its citizens want to buy, but also how business is transacted in a market that will become the largest single consumer base on the planet over the next decade. Full of practical support and guide, the book addresses topics from intellectual property rights to the correct etiquette during a business meeting.
No matter what your business sells, investigating the markets in China is definitely an area to look into, and this easy-to-read informative bitesize guide shows you how!
David Howell
David Howell has been at the centre of government and the political debate for more than half a century. He is the only person to have served in the three administrations of Heath, Thatcher and Cameron. He is also the only minister to have ‘come back’ after a 27-year break. Between spells in government, he has filled numerous other roles in journalism, banking and industry. He is currently President of the Royal Commonwealth Society, Chairman of the Windsor Energy Group and most recently, Chairman of the House of Lords Committee for International Relations. Lord Howell has a track record in forecasting developments long in advance and pioneering thinking on the major issues of our times. His qualifications are completely unique, enabling him to weaving together the ideas, hopes, lessons and consequences of the past fifty years and explaining where they are now leading the British nation.
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The Small Business Guide to China - David Howell
Publishing Details
A Brightword book
www.brightwordpublishing.com
HARRIMAN HOUSE LTD
3A Penns Road
Petersfield
Hampshire
GU32 2EW
GREAT BRITAIN
Tel: +44 (0)1730 233870
Fax: +44 (0)1730 233880
Email: enquiries@harriman-house.com
Website: www.harriman-house.com
First published in Great Britain in 2011
Copyright © Harriman House Ltd
The right of David Howell to be identified as the author has been asserted in accordance with the Copyright, Design and Patents Act 1988.
ISBN: 978-1-90800-311-9
British Library Cataloguing in Publication Data
A CIP catalogue record for this book can be obtained from the British Library.
All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publisher. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published without the prior written consent of the Publisher.
No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by the Publisher, by the Author, or by the employer of the Author.
About the Author
Dave Howell is Nexus Publishing. He has been working as a freelance writer, journalist and publisher for the last 20 years, specialising in technology and business subjects. His work has appeared in the national press and many of the leading technology and business magazines.
Nexus Publishing is a writing and publishing service that specialises in business and technology content creation. From consumer magazines to highly specialist trade journals, David’s writing has appeared in a wide range of publications. As a business writing service, Nexus Publishing is also a micro publisher of print magazines and e-publications.
Introduction
Since China opened its doors to the world in 1978 its growth has been nothing short of meteoric. The 2007-09 credit crunch had little or no impact on the Chinese economy that continues to grow by almost 10% a year.
China itself is now the fourth largest economy behind the USA, Germany and Japan. If its current growth can be sustained, analysts expect China to become the world’s largest economy by 2025.
In addition, China has become renowned as the perfect location for companies to have anything manufactured. The low cost of labour has made the country a magnet for every manufacturing business in the West.
China is not, though, simply the factory of the world. As the Chinese economy has developed, so has its population. The vast majority of China’s 1.3 billion citizens still live in the rural provinces. However, as the population has moved into the cities, a new middle class has developed. Now numbering around 250 million, these new consumers are forming the market focus for many companies in the West. And with an estimated 8.5 million Chinese citizens migrating to urban areas each year in search of work and a better standard of living, the market for your business’ goods and services is inexorably growing.
The markets in China are also not just for large companies. The wealth of business advice and market information that is now available is lifting what was once a veil of secrecy about the Chinese consumer. Today there is well-defined customer information that any size of business can access.
Can small businesses really compete in this vast market? It’s a question that many owner/managers are asking themselves. Emma Jones in her book Go Global succinctly tackled this point when she stated:
Many business owners speak of ‘fear of the unknown’ when it comes to doing business with people they don’t know in countries they’ve never visited and in languages of which they have little knowledge. Certainly, international trade forces us out of our comfort zones. But what it does do is introduce us to new territories and ideally, lucrative ones!
What this book covers
In this book you will not only see how the Chinese economy works and what its citizens want to buy, but also how business is transacted in a market that will become the largest single consumer base on the planet over the next decade.
No matter what your business sells, investigating the markets in China is now a commercial imperative that you must not ignore. With masses of help, support and guidance available from the public and private sectors, what are you waiting for!
Dave Howell
Telford, Shropshire, June 2011
Chapter 1. Doing Business in China
For the small business owner China is often viewed as simply the place where most of the goods they buy are manufactured, or as a ready supplier of every conceivable component if your business is in manufacturing. With services like Alibaba (www.alibaba.com), TradeKey (www.tradekey.com) and the plethora of China based businesses on eBay (www.ebay.co.uk), you could be forgiven for thinking that selling to the Chinese consumer or to Chinese businesses is an impossible pipe dream. The reality is that nothing could be further from the truth. China is ready and waiting for your business’ services and products and has the resources to pay for them.
China itself is also transforming. Its urban areas are rapidly developing, and with this expansion come retailing opportunities that your business can take advantage of. China is estimated to have over 20 million retail outlets with sales that now exceed $1 trillion. Exporting your goods to China is also now not as complex as it once was. As the Chinese market has expanded, so the business support services that international trade requires have also evolved.
And these exporters are not just large corporations. Over 90% of all the exports that the USA sent to China originated with small to medium sized enterprises (SMEs) with a combined value of over $20 billion. The American Chamber of Commerce in China also stated in its 2010 China business climate survey that 77% of respondents considered China to be a key area of investment priority for their companies. Charlie Denson, President of Nike Brand, makes the case for trading with China when he told View, the business insight magazine from PricewaterhouseCoopers:
We’ve moved China off the emerging-markets list. They’re the fastest-growing market in the world. They have the capacity – and they’re building the capability – to become the biggest market in the world.
Brief history of the Chinese economy
The current economic wave that China is riding is of course not the first. China has a history that dates back over 4,000 years. For decades China was the planet’s superpower with innovation in science and technology. The 19th and 20th centuries were not kind to China and it suffered major civil unrest and foreign occupation. China was characterised by the drive to a total socialist state that embodied Mao Zedong’s rule after the Second World War.
What became clear after 1978 when Deng Xiaopeng took power was that the ideological stand of the Chinese Government was not sustainable if improvements in that very area of Chinese society were to be achieved. A hybrid approach was developed and now forms the social, political and economic China we know today.
You must be sensitive to the socialist background that Chinese business still feels the influence of. China may seem as though it has in some aspects at least turned its back on socialism in favour of its own brand of capitalism, but every aspect of doing business in China is still tinged with its history. Deng Xiaopeng called their brand of business socialism with Chinese characteristics
.
Today, central Government in