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Doing Business in China

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CONTENTS

5 China Overview
7 Welcome from Lesley Batchelor OBE, FIEx (Grad) -
Director General, The Institute of Export
9 Foreword from David Godfrey
Chief Executive of UK Export Finance
13 About UK Trade & Investment (UKTI)
15 About the China-Britain Business Council (CBBC)
17 About International Market Advisor (IMA)
19 About this Guide
21 Why China?
29 Download the free Mobile App.
31 Researching the market
37 Gateways into mainland China
59 Choosing the right location in mainland China
69 Sector-specific opportunities in mainland China
81 High-value opportunities in mainland China
87 Free trade zones
105 Establishing the right presence
115 Getting started
131 Marketing
151 Challenges
161 Business culture
177 Selling food to China
185 Resources
189 Useful Links
195 Additional Useful Links
195 Trade Shows
196 Map of China
198 Disclaimer
199 Quick Facts

www.China.DoingBusinessGuide.co.uk 3
China Overview
China is the great economic success story of the past 30 years. Since the reform
and opening-up policy was introduced in 1978, China has changed beyond
recognition. A Soviet-styled planned economy has transformed into a vibrant
market-orientated economy and 600 million people have been lifted out of poverty.

Between 1985 and 2010, 70% of the world population who had been lifted out of
poverty were Chinese. Without China, the global poor population would have risen
by 58 million.

Seizing opportunities

While the rise of China is easy to acknowledge, businesses constantly need to


catch up with the speed and depth of change and development in Chinas large
and complex market space. Whether selling, trading, investing or franchising,
China offers opportunities in abundance to UK companies, large or small.

www.China.DoingBusinessGuide.co.uk 5
Helping you develop new
ideas, find ways to drive down
Time to Start
costs and produce sustainable
improvements in your export
business.
Trading with China
Membership supports all
aspects of your international
trade
Leading UK authority on
trading globally
Tailored training to support
your business needs
Expert solutions for
international trade

Exporting great ideas to you.


Join us today
Call: +44(0)1733 404 400
email: institute@export.org.uk

THE H
AT E
A

RT
ADE

OF INT
TR
L

RN
ATIONA

www.export.org.uk
Welcome from Lesley Batchelor OBE, FIEx (Grad) -
Director General, The Institute of Export
Preparing for any new market needs consideration. When thinking about a country
like China there are many issues, both cultural and business-linked, that you need
to think through.

The Institute of Exports mission is to enhance the export performance of the


United Kingdom by setting and maintaining professional standards in international
trade management and export practice. This is principally achieved by the provision
of education, training and practical support, a helpline and one-to-one assistance
with paperwork.

Dedicated to professionalism and recognising the challenging and often complex


trading conditions in international markets, the Institute is committed to the belief
that real competitive advantage lies in competence and that commercial power,
especially negotiating power, is underpinned by a sound basis of knowledge.

Why not contact us and find out how you can join?

Lesley Batchelor OBE, FIEx (Grad) -


Director General
www.export.org.uk

www.China.DoingBusinessGuide.co.uk 7
International Property &
Construction Consultants
EST. 1885

ESTABLISHED
IN CHINA
FOR OVER
20 YEARS
Foreword from David Godfrey
Chief Executive of UK Export Finance
I am pleased to welcome readers to this IMA guide to doing business in China,
a country whose phenomenal growth has been a defining feature of the global
economy for many years now.

UK firms are already taking advantage of the opportunities. UK exports to China


have increased by more than 37% in the past two years, due to China's fast-
growing consumer market, the growing number of middle-income consumers
and its position in the Asia Pacific region and neighbouring economies.

Of course exporting always carries some risk, and doing business in a large nation
developing as rapidly as China presents its own challenges and uncertainties.
UK Export Finance can help exporters manage the payment risks, complementing
banks and commercial insurers. We also provide a free information service on
export finance and insurance. Other organisations, most notably UK Trade &
Investment, can provide wider support.

The large variety of exports we have supported to China illustrates the scale of the
opportunity. Three recent examples include guaranteeing a loan to purchase Airbus
aircraft; contract bond support for photographic filters; and working capital for the
supply of blackcurrant seeds. UK Export Finance is also playing its role in the
development of London as a centre for Chinese currency business through our
ability to guarantee loans in offshore Renminbi for Chinese buyers of UK goods
and services.

All in all, exciting times, and we look forward to supporting UK exporters with
their exports to China.

David Godfrey
Chief Executive of UK Export Finance
www.gov.uk/government/organisations/uk-export-finance

www.China.DoingBusinessGuide.co.uk 9
CHINA
Doing Business in China

UK Export Finance: Most exports from the UK to China are


clearing your path to trade sold on short credit terms of typically up
to six months. However sales of capital
Despite a recent relative slowdown in its goods or construction projects are usually
record-breaking economic growth, China arranged on longer terms, with buyers
remains a key market for UK exporters. sometimes looking for payment terms
But alongside the opportunities, it is of 10 years or more.
important for firms to manage the risks
relating to payment and finance. Working
to complement the private sector, UK Specific issues to manage can include:
Export Finance (UKEF) can be a useful
partner in this field. Here is our guide to Having to wait for payment, restricting
how we can help clear your path to trade. cashflow

Chinas astonishing GDP growth of about Being exposed to the risk that the
10% a year for 30 years from 1978 firmly buyer cannot (or will not) pay for the
established it as one of the most significant exports for example, if the buyer
markets for UK exports. Although this goes bankrupt
growth rate has now eased to about 7%,
Chinas rising middle class and continued Being asked by the buyer to provide
development of free trade zones mean its a performance bond in return for an
trade outlook remains strong. advance payment. The bond would
need to be provided by the exporters
According to the latest China trade and bank which is likely to ask for cash
export guide from UK Trade & Investment, security, another potential cashflow
top UK exports to the country include restriction
cars, pharmaceuticals, power generating
machinery, metal ores and industrial
machinery. Other sectors identified as Help is at hand
strong opportunities are as diverse as
financial services, fashion, and TV UK exporters can talk to their bank
programme licensing. or approach other specialist financial
organisations to try to secure working
However, trade with China with its high capital, and to insurers or brokers to
levels of state business control and often source insurance against the risk of not
unpredictable legal system does carry a being paid. Where they are unable to
degree of challenge and risk. In 2014 the find all the support they need from these
World Bank ranked China as low as 96th sources, UK Export Finance (UKEF)
in the world for ease of doing business. may be able to help.
In particular, exporting requires careful
financial management, from securing In recent years we have supported
working capital on competitive terms, to UK exports to China in the aerospace,
considering export insurance, or fulfilling medical, scientific equipment, industrial
requirements to obtain performance processing, oil and gas and creative and
bonds. media sectors.

Visit the Website and download the free Mobile App


We can consider support for all exporters, Working capital support UKEFs Export
large and small, across a wide range of Working Capital Schemecan enhance your
sectors. UKEF currently has the capacity banks ability to lend you working capital
to support 1 billion of new export to support export-related activity. Under the
business to China. scheme, we provide partial (typically 80%)
guarantees to lenders to cover the credit
risks associated with export working
A wide range of support capital facilities. The scheme is particularly
useful in circumstances where a UK
Types of assistance UKEF is able to offer, exporter wins an overseas contract that
in the right circumstances, include: is larger than it is used to handling, or
manages to win a number of contracts at
Bond support Under our Bond Support the same time, but may struggle to finance
Scheme we can offer guarantees to banks them all at once.
issuing performance or other contract
bonds in relation to UK exports to China. Both the bond support and export working
This often means the bank can issue the capital products are accessed through
bond and also expand working capital participating banks. If your bank
facilities for exporters, as the extra credit representative is unfamiliar with the
is guaranteed by UKEF. products, they can be referred to our
Banking toolkit, which can accessed at
As an example, in 2013 UKEF helped www.gov.uk/uk-export-finance
specialist oil and gas handling and
transport specialist Techflow Marine of Credit insurance Our Export Insurance
Northumberland obtain the performance Policy (EXIP) can insure your firm against
bond it needed to secure its biggest-ever the commercial and political risks of not
Chinese contract. Without a UKEF being paid under an export contract, where
guarantee for its bank, the need to set cover is unavailable from the private
aside its own cash cover against this bond sector. There is no maximum or minimum
would have restricted cashflow and held contract value for consideration, and the
back the firms growth. UKEF guaranteed policy can cover up to 95% of contract
a proportion of the bond which helped value. UKEF can also provide insurance
release cash to fund its work on the protection to exporters against the calling
$5.8 million contract and seek other of contract bonds unfairly or due to political
business as well. events.

We had a turnover of 4.6 million, so this If you think we might be able to fill a gap,
Chinese contract was significant for us, ask your insurance broker to work through
said Techflow Marine Director Graham our Broker toolkit, which can accessed at
Clark. We didnt want to turn it down, www.gov.uk/uk-export-finance
which has happened with large contracts
in the past. The help from UKEF meant
that we were able to fund the contract,
and use the freed-up funds to look for
other international contracts.

www.China.DoingBusinessGuide.co.uk 11
CHINA
Doing Business in China

Buyer loans and loan guarantees Export Finance Advisers


We can provide medium and long-term your free resource
loan guarantees to banks making loans
to overseas buyers of UK goods and UKEFs regional network of Export
services. In some circumstances, we may Finance Advisers (EFAs) stand ready
be able to lend directly to an overseas to offer free trade finance information
buyer to finance the purchase of capital to UK companies who are exporting
goods and/or services from UK or considering exporting to China.
businesses.
The EFAs act as local points of contact
Letter of credit guarantees Letters of to introduce exporters and prospective
Credit (LCs) are a form of payment exporters to finance providers, credit
guarantee made by the buyers bank to the insurers, insurance brokers, trade support
exporter, subject to certain conditions such bodies and sources of government
as delivery on time and to the specified support. They can also help explain UK
standards. Exporters will need to consider Export Finances own product range,
carefully in each case whether it is complementing what is available in the
worth requesting one, as there is a cost private market.
attached. In some circumstances, UKEF
can provide exporters banks with its own For more information and to book
guarantee of payment based on LCs from a meeting with an EFA, visit:
the buyers bank, so again we are a good www.gov.uk/making-exports-happen
source of information and support.
Note: more detailed UKEF contact
information can be found in the
Resourcessection of this guide on
page 185.

Visit the Website and download the free Mobile App


About UK Trade & Investment (UKTI)
UKTI is the British Government department that helps UK-based companies
succeed in an increasingly global economy. UKTI also helps overseas companies
bring their high quality investment to the UKs economy. UKTIs range of expert
services are tailored to the needs of Individual businesses to maximise their
international success. UKTI provides companies with knowledge, advice and
practical support.

Through a range of unique services, including participation at selected tradeshows,


outward trade missions and providing bespoke market intelligence, UKTI can help
you crack foreign markets and get to grips quickly with overseas regulations and
business practice.

With headquarters in London, UKTI have professional advisers around the UK


and staff across more than 100 countries.

Contact UKTI

Contact your local International Trade Team or Scottish Development International


(SDI), Welsh Government (WG) or Invest Northern Ireland (INI) offices to find out
more about the range of services available to you.

You can find your nearest International Trade Team at:

www.gov.uk/ukti

General UKTI enquiry number: +44 (0) 207 215 5000


UK Trade & Investment
1 Victoria Street
London,
SW1H 0ET
United Kingdom

Email: enquiries@ukti.gsi.gov.uk

www.China.DoingBusinessGuide.co.uk 13
About the China-Britain Business Council (CBBC)
The China-Britain Business Council (CBBC) is the leading organisation helping
UK companies grow and develop their business in China. Their mission is to help
UK companies of all sizes and sectors, whether new entrants or established
operations, access the full potential of the fastest growing market in the world.

Through 60 years of engagement, they have built up exceptional connections with


government and business across China. The CBBC Board is made up of senior
business people from companies with a strong China interest, and their business
advisers all have extensive first-hand experience of doing business in China.

The CBBC deliver a range of practical services, including: advice and consultancy,
market research, event management, an overseas market introduction service,
trade missions and exhibitions, and setting up rep offices.

The CBBC have 10 UK offices and 13 offices across key locations in China.
This in-country network provides invaluable local insight, access, and knowledge.
As a partner of UK Trade & Investment (UKTI) the CBBC deliver its business-to-
business services in China.

Whilst use of CBBC's services is open to all British registered companies on a


pay-as you-go basis, the CBBC are also a membership organisation with some
900 British company and individual members. For companies serious about
developing business in China, CBBC membership provides a cost-effective
route to ongoing support, networking, and exclusive services. CBBC corporate
members also benefit from reciprocal membership of the Beijing based British
Chamber of Commerce in China (Britcham), including access to more than 100
events per year in Beijing and a stronger membership network.

In 2013 the CBBC handled 5330 enquiries; organised and participated in 400
events across the UK and China, including hosting 92 Chinese inward delegations
in the UK; delivered 199 OMIS reports and 10 large research projects; increased
circulation of CBBC's magazine to 6000 copies per month.

For more information on the CBBC please visit their website at


www.cbbc.org

www.China.DoingBusinessGuide.co.uk 15
About International Market Advisor (IMA)
International Market Advisor (IMA) works The guides contents focus on the market
with British and Foreign Government in question, how to approach that market
departments, Embassies, High and the help and support available, and
Commissions and international Chambers include informative market overviews, plus
of Commerce throughout the world. Our details of business opportunities, listings
work helps to identify the most efficient with website links to British and Foreign
ways for British companies to trade with Government support services and essential
and invest in opportunity-rich overseas private sector service-provider profiles.
markets.
Sponsoring a Doing Business Guide
During the last ten years IMA has therefore offers a unique opportunity to
worked with the British Government's positively promote your products and
overseas trade and investment department services to high-profile business leaders,
UK Trade & Investment (UKTI), and has specific exporters, investors and effective
written, designed, produced, launched business travellers who will be actively
and distributed over one million copies of seeking out service providers to assist
more than 100 country-specific print and them in developing their business interests
multi-media based reports, guides and in the targeted markets.
publications, including the internationally-
recognised Doing Business Guide series For more information on IMA
of trade publications. These are composed please visit our website:
of market and industry sector-specific,
multi-format print and digital trade reports, www.DoingBusinessGuides.com
together with some of the internets most
visited international trade websites - all of Contact IMA
which are designed to advise and assist Office address
UK companies looking to trade with and
invest in overseas markets. These reports International Market Advisor
and guides are then distributed free-of- IMA House
charge through the IMA and UKTI global 1 Terrace Road
networks - over 500 distribution outlets in Buxton
total. Further distribution takes place at SK17 6DR
global exhibitions, roadshows, conferences United Kingdom
and trade missions, and IMA receives daily
requests for additional copies of the guides Email
from these networks and from businesses info@ima.uk.com
considering exporting.
General enquiries switchboard
Each of IMAs 'Doing Business Guides is +44 (0) 1298 79562
produced in three formats: a full colour,
glossy, paper-based brochure; a supporting Media enquiries
fully-interactive and updatable multi-media
based website; and the website contents Newsdesk & out of hours
available as a free-of-charge downloadable +44 (0) 1298 79562
smartphone/tablet app.

www.China.DoingBusinessGuide.co.uk 17
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CHINA
Doing Business in China

ABOUT THIS GUIDE

This guide aims to provide an introduction to various aspects involved in doing business
with China, and contains a wealth of information on market intelligence, overviews of
business opportunities, practical guidance on developing a regionalised marketing strategy,
as well as sector briefing, key business considerations and challenges, practical advice
and best practices, and also lists of useful contacts both in the UK and in China. It also
gives a brief overview of both Hong Kong and Taiwan as potential gateways into the
Chinese market. You can access all this and further business information, research
reports and the latest business opportunities on the UKTI and CBBC websites see the
Resources section at the end of the guide.

The main objective of this Doing Business in China Guide is to provide you with basic
knowledge about China; we do not pretend to provide all the answers in the guide, but
novice exporters in particular will find it a useful starting point.

The guide is available in four formats:

Website (www.China.DoingBusinessGuide.co.uk)
a free downloadable 'mobile device-friendly App
PDF Download (please see the website for more details) and
this full colour hard-copy Brochure

Doing Business in China Guide Team;

Project Director: Craig Smith


Managing Editors: Olivia Taylor and Brian Underwood
Sponsorship Manager: James Clowes
Creative Manager: Paul King
Creative Consultants: Twistedgifted www.twistedgifted.co.uk

Printed using materials


from sustainable sources

www.China.DoingBusinessGuide.co.uk
Doing Business in China Guide published in the UK by International Market Advisor Ltd.
2015 International Market Advisor Ltd (unless otherwise stated). All rights reserved.
Contains public sector information licensed under the Open Government Licence v3.0.

19
CHINA

By 2030, it is predicted that there will be 221 cities


in China with a population of more than 1 million,
compared with 35 such cities in Europe today.
WHy CHINA?

www.China.DoingBusinessGuide.co.uk 21
CHINA
Doing Business in China

Why China? While many of the worlds major economies


are still struggling to recover from economic
Background contraction, Chinas economy grew by
9.2% in 2011 (down from 10.3% in 2010),
China is the great economic success story and this economic slowdown continued
of the past 30 years. Since the reform in 2012 to around 8.2%, partly due to
and opening-up policy was introduced suppressed demand in Chinas largest
in 1978, China has changed beyond export markets (Europe, USA) but also
recognition. A Soviet-styled planned to tightening of monetary policy in late
economy has transformed into a vibrant 2011. The Chinese government has
market-orientated economy and 600 subsequently since been loosening
million people have been lifted out of monetary policy and has launched a
poverty. Between 1985 and 2010, 70% major investment programme.
of the world population who had been
lifted out of poverty were Chinese. The Chinese Government is now pressing
Without China, the global poor population hard to improve infrastructure and social
would have risen by 58 million. welfare as well as targeting resources to
develop Chinas vast rural and interior
Well known for its manufacturing capability, regions, unleashing domestic consumption
China is the largest global producer of among the wider population. Industrial
toys, textiles, washing machines, cameras structures are shifting inland with dozens
and computers (among hundreds of other of new cities emerging and coastal areas
products). It is also the worlds largest developing into sophisticated urban
consumer of iron, steel, coal and cement, clusters.
and Chinas hunger for raw materials
continues. McKinsey reckon that China's economic
transformation is happening at 100 times
the scale of the first country to urbanise
Driving global economic recovery the UK and at 10 times the speed. By
2030, they predict that there will be 221
Traditionally, China provided low-cost cities in China with a population of more
manufacturing solutions for the global than 1 million, compared with 35 such
market, but exports declined sharply after cities in Europe today, and HSBC reckon
the global downturn in 2008 and Chinas there are currently around 80 Chinese
manufacturing industry responded by cities with a population of over 5 million
quickly moving up the value chain. with no system of mass transportation.
By 2025, China will build TEN New York-
The Chinese economy has grown at just sized cities. Forty billion square metres
under 10% a year for 32 years, overtaking of floor space will be built in five million
Japan in 2010 to become the worlds 2nd buildings. 50,000 of these buildings could
largest economy. According to the OECDs be skyscrapers the equivalent of ten
International Comparison Programme (ICP), New York Cities.
China is projected to overtake the US in
2016 in Purchasing Power Parity (PPP) Source: Mckinsey,
terms. Preparing for Chinas urban billion

Visit the Website and download the free Mobile App


Economic Focus Regionalisation
Richer provinces are rapidly converging
Gross Domestic Product (GDP) grew by with advanced economies in terms of
about 10% a year from the start of market income levels and economic structure.
reforms in 1978 to the 2008 financial crisis. Poorer provinces remain highly dependent
The headline figure has now (May 2015), on investment-driven growth. The north-
fallen to just over 7% as the government eastern provinces face especially daunting
rebalances the economy to make growth challenges: maintaining steady growth and
less reliant on investment. pivoting away from heavy industry, their
traditional comparative advantage but also
The World Bank predicts growth of 7.2% in major source of Northeast Chinas chronic
2015 and 7.1% in 2016 following growth of air pollution; and reform.
7.7% in 2013. Slowing growth has resulted
in significant changes to Chinas growth The main priority for Chinas leadership
strategy. Nearly 40 Chinese companies in 2014 was the anti-corruption campaign.
have entered the Global Fortune 500 list, That said, significant progress was
and Chinas middle class is expected to achieved on implementing economic
reach 600 million by 2020. Import demand reforms, in particular financial, fiscal
is expected to rise by USD $3.4 trillion and administrative reform.
between 2010 and 2020.
Growth will continue to slow in 2015
Source: UKTI March 2015 thanks to slowing credit growth combined
with an ongoing property market correction.
The FCO recently published Chinas That said, the authorities have emphasised
economic annual data for 2014. The head- that reform cannot come at the expense
line figure was growth of 7.4%, consistent of stability. This likely means that targeted
with the authorities target of around investment stimulus will continue to be
7.5%. Predictably the media focused on used to ensure a gradual rather than
the fact that growth was the slowest for precipitous deceleration in growth.
24 years. This is true but misses the point.
Incremental GDP growth last year (2014) Rebalancing, regionalisation and reform
was nearly USD $1 trillion, around 30% of will all continue. The pace of reform is
the entire UK economy and nearly double the most interesting variable. A mild
Chinas incremental GDP growth in 2009, acceleration in reform is likely, on the back
when headline growth was more than 10%. of a better external environment, with
stronger US growth and lower oil prices;
Source: British Embassy Beijing: and tighter budget constraints at the local
China Economic Focus January 2015 level, focusing on improving efficiency,
selling assets and identifying more sustain-
Rebalancing able new sources of revenue.
Consumption contributed more to 2014
growth than investment. The services Source: British Embassy Beijing:
sector is growing faster than manufacturing, China Economic Focus January 2015
keeping the labour market tight. Income
growth remains high, supporting house-
hold consumption. These changes are
driven primarily by powerful structural
forces, including demography.

Source: British Embassy Beijing:


China Economic Focus January 2015

www.China.DoingBusinessGuide.co.uk 23
CHINA
Doing Business in China

The economy Key economic indicators


The Chinese economy grew by 7.4% in
2014, consistent with the official target of Headline fixed asset investment (FAI)
around 7.5%. Economic growth in 2014 increased by 15.7% in 2014 (on a year
Q4 was 7.3%, the same as in 2014 Q3 earlier), compared with 15.8% from
and higher than market consensus. On January to November and 19.6% in 2013.
a quarterly basis (seasonally adjusted), This was in line with market expectations.
growth further slowed to 1.5% in Q4 from On a monthly basis (seasonally adjusted),
1.9% in Q3. FAI growth rose 1.21% in December,
compared with 1.02% in November.
In 2014 growth in most provinces did not Infrastructure investment further increased.
meet local targets. As a consequence,
most provinces have lowered their Industrial production (IP) grew by 7.9%
targets for 2015. Shanghai is the only in December 2014 (on a year earlier), up
province/municipality so far that has from 7.2% in November, a bit higher than
not set a GDP growth target for 2015. market expectations. On a monthly basis
(seasonally adjusted), IP growth was
The data showed some positive structural 0.75% in December, compared with 0.54%
changes. The tertiary (services) sector in November. IP growth for whole year
contributed 48.2% to GDP in 2014, up 2014 was 8.3%, compared with 9.7% in
from 46.9% in 2013. Consumption 2013.
contribution to GDP was 51.2%, compared
with 49.2% in 2013, while investment The purchasing managers index (PMI),
contributed 48.5% to GDP. a forward-looking measure of business
conditions, moderated in December. The
In January 2015, Chinas Ministry of official manufacturing PMI slowed further
Commerce released the draft Foreign to 50.1 in December from 50.3 in
Investment Law for comment. The law will November. This was the lowest in 2014.
give "pre-establishment national treatment" The HSBC manufacturing PMI, seen as a
to potential foreign investors and adopt the better measure of conditions facing small
"negative list" approach that is used in the businesses, was 49.8 in the flash reading
China (Shanghai) Pilot Free Trade Zone for January 2015, compared with 49.6 the
(FTZ), (See the Free trade zone section previous month.
later in this guide for more detail). It will
be the most significant change in Chinas Official services PMI improved to 54.1 in
regime for foreign investment. December 2014 from 53.9 in November.
The HSBC services PMI also improved to
Source: British Embassy Beijing: 53.4 in December from 53 in November.
China Economic Focus January 2015 Growth of retail sales increased by 11.9%
in December (on a year earlier), compared
with 11.7% in November. This was higher
than market expectations. On a monthly
basis (seasonally adjusted), retail sales
grew by 1.01% in December.

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Retail sales growth for 2014 was 12%, The full year CPI in 2014 rose by 2%,
compared with 13.1% in 2013. Online retail well below the official target of 3.5%.
sales increased significantly: up by nearly
50% in 2014 compared with 2013. The Producer Prices Index (PPI), an
indicator for upstream inflation pressure,
Source: British Embassy Beijing: declined by 3.3% in December 2014 (on
China Economic Focus January 2015 a year earlier), further down from 2.7%
decline in November. This was below
Credit growth market expectations. Falling oil prices
In 2014, China's overall credit growth and overcapacity were the main causes
slowed to 14.7% year-on-year, down of the contraction. The full-year PPI in
from 18.5% in 2013. Total social financing 2014 declined by 2.2%, compared with
(TSF), a measure of all forms of new a 2% decline in 2013.
credit, increased by RMB 1.69 trillion
(169 billion) in December, compared Source: British Embassy Beijing:
with RMB 1.15 trillion (115 billion) in China Economic Focus January 2015
November and higher than market
expectations. Exports and imports growth
Chinas exports rose by 9.7% in December
New bank lending increased by RMB 2014 (on a year earlier), up from 4.7% in
697 billion (69.7 billion) in December, November and beating market expectations.
compared with RMB 852.7 billion (85.27 The improvement was mainly due to
billion) in November. This was lower than improvement in exports of mechanical and
market expectations. Mid-to-long term electrical products and hi-tech products.
loans increased, partly due to central Exports to Hong Kong and EU improved a lot.
governments approval of many
infrastructure projects after November Imports declined by 2.4% in December
and local government needs to raise 2014 (on a year earlier), compared with
fund for these projects. 6.7% decline in November and much
higher than market expectations. Weak
Money supply (M2) grew by 12.2% in demand and low commodity prices still put
December (on a year earlier), compared pressure on imports. China registered a
with 12.3% in November. Chinas foreign trade surplus of USD $49.6 billion in
exchange reserves totalled USD $3.84 December 2014, down from the highest
trillion as of the end of December 2014, record of USD $54.5 billion in November.
compared with USD $3.89 trillion as Chinas full year trade growth in 2014 was
of the end of September 2014. 3.4%, well below the official target of 7.5%.
This was the third consecutive year that
Source: British Embassy Beijing: trade growth failed to meet the target.
China Economic Focus January 2015 This was attributed to three factors:
slow recovery of the world economy;
Inflation the weakening of Chinas comparative
The consumer prices index (CPI) rose advantages in low cost and declining of
by 1.5% in December 2014 (on a year manufacturing investment in China from
earlier), compared with 1.4% in November. advanced economies; and the rapid falling
This was in line with market expectations. of commodity prices.
On a monthly basis, CPI rose by 0.3% in
December, compared with a 0.2% decline Source: British Embassy Beijing:
in November. Food inflation was the main China Economic Focus January 2015
contributor of the increase.

www.China.DoingBusinessGuide.co.uk 25
CHINA

Labour market RMB:$ exchange rate


Income growth remained strong. Rural The RMB depreciated by 0.36% against
incomes grew by 9.2% in Q4, lower than the US $ in 2014, compared with 3.1%
9.7% in Q3. Growth of urban income appreciation in 2013. The RMBs real
slowed to 6.8% in Q4, compared with effective exchange rate (REER)
6.9% in Q3. In 2014 income growth was appreciated by 6.2% in 2014, compared
8.0%, urban income grew by 6.8% and with 7.9% appreciation in 2013.
rural income grew by 9.2%.
Source: British Embassy Beijing:
The labour market remained buoyant. China Economic Focus January 2015
The quarterly job/job seeker ratio was
1.15% in Q4, compared with 1.09% in Q3.
13.22 million new urban jobs were created Trade with the UK
in 2014, a record year despite the growth
slow-down. For many years the USA has been our
largest trading import partner by value, but
Source: British Embassy Beijing: since 2013 it has shared this top position
China Economic Focus January 2015 with China.

Property sector Exports to China from the UK in February


Official data show that out of 70 cities 2015 were 0.9 billion, a 7.6% increase
surveyed, 66 saw lower property prices from February 2014. Imports to the UK
in December 2014 (on a month earlier), from China totalled 2.9 billion in February
compared with 67 in November. The 2015, 9.7% down from the previous month,
contraction of property prices further but 23% up from February 2014.
slowed. Property prices in first-tier cities
(Beijing, Shanghai, Guangzhou, Source: HM Revenue & Customs Overseas
Shenzhen) rose, but prices in second- Trade Statistics, April 2015
and third-tier cities were still declining.
On a year before, 68 out of the 70 cities
had lower property prices in December
2014, the same as in November.

Property sales increased by about 9% in


December 2014 compared with November.
Property sales in first-tier cities in December
all increased above 15%. Property
investment grew by 10.5% in 2014,
down from 19.8% in 2013.

Source: British Embassy Beijing:


China Economic Focus January 2015

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Doing Business in China

Source - Seizing opportunities


www.uktradeinfo.com/Statistics/NonEUOver-
seasTrade/Pages/NonEuOTS.aspx While the rise of China is easy to
acknowledge, businesses constantly need
UKs exports to China are growing 3 times to catch up with the speed and depth of
as fast as our imports from China. Top UK change and development in Chinas large
exports to China include: and complex market space. Whether
selling, trading, investing or franchising,
road vehicles China offers opportunities in abundance
medicinal and pharmaceutical products to UK companies, large or small. It is
power generating machinery / therefore worth contacting the CBBC to
equipment assess the very latest updates and
metalliferous ores and scrap metal opportunities available across China.
general industrial machinery,
equipment and parts See: www.cbbc.org for more information.

Source: UKTI March 2015

www.China.DoingBusinessGuide.co.uk 27
CHINA

Visit the Website and


download the free
Mobile App
www.China.DoingBusinessGuide.co.uk

Website and Mobile App features include:

Latest business news


Up-to-date travel advice
35 regional city reports
Interactive Supporting Organisations and Market Experts profiles
Essential contact details
Listings with links to up-and-coming trade shows
Links to UK Trade & Investment (UKTI) international trade support
services

Powered by
CHINA

Before venturing into business in China, it is crucial


that companies understand both the market they are
entering and their own strategy. Products and selling
points that appeal to one demographic in the UK can
have an entirely different cultural relevance in China
and it is important to understand these differences
before making your investment.
RESEARCHING THE MARKET

www.China.DoingBusinessGuide.co.uk 31
CHINA
Doing Business in China

Researching the market Their Chinese team have typically trained


or worked in the UK as well as having a
Before venturing into business in China, wealth of business experience in China;
it is crucial that companies understand and their British staff are China specialists
both the market they are entering and who have extensive experience helping
their own strategy. Products and selling international companies in China.
points that appeal to one demographic
in the UK can have an entirely different Together their team is well-placed to
cultural relevance in China and it is help UK companies understand market
important to understand these differences potential and to advise on the best way
before making your investment. to access it. See the CBBC contact
details in the Contacts section at the
Moreover, regional economic and cultural end of this guide for addresses of
differences mean that even within China CBBCs UK and China offices.
the marketability of some products may
vary widely between different areas.
Good, reliable research will save costs Taking a strategic approach
and improve efficiency and can have an
impact on the long-term success of British companies are advised to
your venture. undertake as much market research
and planning as possible. Doing business
As the China-Britain Business Council with China can be challenging, but taking
(CBBC) is the UK governments chosen a strategic approach is the key to making
partner to deliver business development the process manageable. The first step
services on their behalf in China, they is to spend some time thinking about
will be able to assist you further. your company's China objectives.

CBBC works closely with UK Trade & The questions listed on the right should
Investment (UKTI), the British Embassy help you to focus your thoughts. Your
in Beijing and the British Consulate- answers to them will highlight areas for
Generals in Shanghai, Chongqing and further research and also suggest a way
Guangzhou. forward that is right for your company.
You may then want to use this as a basis
CBBCs research and consultancy teams for developing a formal China strategy,
span thirteen cities in China and include although this may not be necessary
sector specialists who can help you or appropriate for all companies:
assess opportunities for your business.

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Questions to Ask If the latter, will you set up a wholly
foreign-owned enterprise, or a Joint
Your Aims Venture with a Chinese partner?

Do you wish to buy from China, Would Hong Kong be a safer place
sell to China or both? to start?

Do you know if you can be Your Knowledge


competitive in China?
How will you communicate both with
Does your company have the time, your Chinese partners and with your
resources and commitment needed customers?
to break into a new market?
Do you know how to locate and
Do you have the time, resources and screen potential partners, agents
commitment needed to handle the or distributors?
demands of communication, travel,
product delivery and after-sales Are there any legal or regulatory
service? issues affecting your market entry?

Your Company Do you know what the local


competition is likely to be, and what
What are the unique selling points they are doing?
of your products and how will they
appeal to Chinese consumers? Have you evaluated the business
risks of all aspects of your venture,
Who will be leading the project within including protecting your intellectual
your company? property and conducting due
diligence?
Will you aspire to a nationwide
presence, or focus on a regional Some of these questions will require
market? quantitative research in your sector,
while others involve more contextual and
Which locations will provide the most cultural considerations. Talking to other
favourable market for your product people in your industry and regularly
first-tier cities with more sophisticated visiting your intended market will give you
markets, or developing regional cities access to the most current advice, and
with potentially more opportunities such experience can often lead to new
and less competition? insights and form the basis for further
research. Furthermore, the increasing
What kind of venture will best suit use of e-commerce and B2B websites
your company, both initially and in the in China has made identification of (and
long term will you operate from the access to) potential business partners
UK or establish a physical presence possible across the globe.
in China?

www.China.DoingBusinessGuide.co.uk 33
CHINA
Doing Business in China

Consultation and bespoke research Possible ways in which OMIS can


help your business include:
However, research based on secondary
information is often inadequate. Many Market research & analysis
websites and online materials are written Sector reports
in Chinese; the quality and reliability of Market initiatives
content varies greatly and sometimes Regulatory environment
certain information is simply unavailable. Market opportunities
It is therefore essential to be able to verify
the initial research findings and conduct Identification of local contacts
further investigation. Agents
Distributors
Often this requires mapping out a Suppliers
bespoke research brief face-to-face with Potential partners
the help of specialists, and exploring what
additional information you might need to In-market activities
make an effective entry into the market, Meeting arrangements
and how you can make the contacts vital Event organisation, such as
to success. There are a large number of workshops, seminars, promotional
highly qualified China-based consultancies activities and product launches.
that can help you conduct research on
the Chinese market, providing advice For more information about how OMIS
on some of the questions on the previous might be used to assist your companys
page and assessing the business strategy for China, contact the CBBC's
opportunities available. As a non-profit OMIS team at: omis.london@cbbc.org,
organisation, the CBBCs services are a or your local UKTI International Trade
popular choice for many SMEs from the Adviser via: www.greatbusiness.gov.uk
UK.

Help available for you

The Overseas Market Introduction


Service (OMIS) is a UKTI service
delivered by CBBC in China and UKTI
in Hong Kong and Taiwan. This service
can assist you by undertaking tailored
research using their extensive network of
dedicated researchers across the market.
This can be used in a wide variety of
ways to help your business with its
particular needs when entering the
Chinese market.

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Other UKTI and CBBC services

UKTI, together with its partner the CBBC, assists new and experienced exporters with
information, help and advice on entering the Chinese market.

These services include:

An Export Health Check to assess Advice on forming international joint


your companys readiness for ventures and partnerships.
exporting and help develop a plan
of action. Exploratory visits to China.

Training in the requirements for Alerts to the latest and best business
trading overseas. opportunities.

Access to an experienced CBBC or To find out more about commissioning


UKTI local International Trade any of these services, contact your local
Adviser. UKTI office.

Advice on how to go about market See: www.gov.uk/government/


research and the possibility of a grant organisations/uk-trade-investment
towards approved market-research or CBBC office: www.cbbc.org
projects.

Launchpad service (CBBC), providing


a simple, cost-effective, low-risk and
legal means of having a presence in
China, before you set up your own
office there.

Ongoing support to help you continue


to develop overseas trade and look at
dealing with more-sophisticated
activities or markets.

Information, contacts, advice, mentoring


and support from UKTI/CBBC staff in
the UK and their/CBBCs network of
staff in China.

Support to participate in trade fairs


in China.

Opportunities to participate in sector-


based trade missions and seminars.

Access to major buyers, local


governments and supply chains in
China.

www.China.DoingBusinessGuide.co.uk 35
GATEWAyS INTO MAINLAND CHINA
CHINA

Greater China is a term often used to refer to the


collective regions of mainland China, Hong Kong/
Macau and Taiwan, as these regions share close
business, ethnic, political and cultural connections.
Business opportunities in these regions should
not be overlooked, and while companies should
really treat these markets as separate, Hong
Kong/Macau and Taiwan may also provide a
gateway to business success in mainland China,
as well as in the wider Asia-Pacific region.

www.China.DoingBusinessGuide.co.uk 37
CHINA
Doing Business in China

Gateways into mainland China Hong Kong


Greater China is a term often used to
An alternative to plunging straight into
refer to the collective regions of mainland
the Chinese market is to look closely at
China, Hong Kong/ Macau and Taiwan,
how Hong Kong might work as a first
as these regions share close business,
step into the region. Hong Kong has
ethnic, political and cultural connections.
very similar business practises to the
Business opportunities in these regions
UK and with English being one of the
should not be overlooked, and while
primary languages spoken, it can be
companies should really treat these
a less daunting prospect.
markets as separate, Hong Kong/Macau
and Taiwan may also provide a gateway
With one of the most open and business-
to business success in mainland China,
friendly environments in the world, Hong
as well as in the wider Asia-Pacific region.
Kong is the world's 8th largest trading
economy and one of Asia's leading
financial and business centres. Its per
capita Gross Domestic Product at
purchasing power parity ranks 5th highest
in the world (2011), and in 2015 Hong
Kong was again ranked as the world's
freest economy in the Wall Street Journal
and Heritage Foundation's Index of
Economic Freedom as it has for the
past 21 consecutive years. See:
www.heritage.org/index/ranking

Hong Kong offers excellent opportunities


for UK companies and is a major centre
for British business in the region. About
120 British companies have regional
headquarters in Hong Kong. Another 210
have regional offices.

Benefits for British businesses exporting


to Hong Kong include:

strong business links with the UK


common language and culture
strong intellectual property rights
protection
well established rule of law

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Growth potential becoming increasingly connected with
mainland Chinas through the Closer
Economic growth Economic Partnership Agreement
Hong Kong is an open economy and an (CEPA). CEPA opens up huge markets
international financial centre that acts as for Hong Kong goods and services,
a conduit into and out of China for both greatly enhancing the already close
goods and capital. economic cooperation and integration
between the Mainland and Hong Kong.
Hong Kongs growth has averaged 4.5% See: www.tid.gov.hk/english/cepa/cepa_
over the last 10 years. The economy grew overview.html for more information.
2.5% (year-on-year) in 2014. This is the
slowest quarterly growth in 18 months Free Trade Agreements (FTAs)
and is the result of sluggish external CEPA is the first free trade agreement
demand and decelerating domestic ever concluded by mainland China and
consumption. Hong Kong. It aims to liberalise markets
for goods and services.
Trade and logistics, financial services,
tourism and professional services are Hong Kong has signed a comprehensive
the traditional pillars of the economy. FTA with the European Free Trade
In recent years however, the Hong Kong Association (EFTA). This agreement
Government has been promoting six new is Hong Kongs first with the European
pillars of the economy, namely medical economies.See: www.tid.gov.hk/english/
services, educational services, testing trade_relations/hkefta/ for more
and certification, innovation and information.
technology, creative industries and
environmental technology.

These sectors combined provide 57%


of Hong Kongs Gross Domestic Product
(GDP). The services sector now accounts
for 93% of Hong Kongs GDP.

The economy was boosted by 54 million


tourists in 2013 which included 40.5
million from Mainland China. This is
equivalent to around 7 times Hong Kongs
population.

Hong Kongs economy is separate from


that of Mainland China, and has its own
currency, legal system and taxation.
However, Hong Kongs economy is

www.China.DoingBusinessGuide.co.uk 39
CHINA
Doing Business in China

Challenges Hong Kong companies were the first to


move their manufacturing operations to
Hong Kong is ranked second in the World the Pearl River Delta (PRD) region of
Banks Ease of Doing Business index. China, and there are now over 70,000
See: www.doingbusiness.org/rankings Hong Kong companies in Guangdong
and presents fewer challenges for UK Province alone, employing over
companies than most overseas 11 million people.
markets.
Guangdong Province is a growing market
Links with the mainland and home to the mainlands wealthiest
The size and growth rate of the Mainland consumers. It is a substantial manufacturing
China market offers excellent opportunities base often called The Workshop of the
for UK business and many companies World. As so many of these factories are
use Hong Kong as a base for entering Hong Kong owned and managed, there is
the mainland market. a great deal of knowledge in Hong Kong
about doing business in the PRD,
Strengths of the Hong Kong market as Guangdong Province and other parts of
a gateway to mainland China include: China. UKTI Hong Kong, in partnership
with the China Britain Business Council
base for regional operations (CBBC) in Shenzhen and UKTI
proximity to Pearl River Delta (PRD); Guangzhou, also offer an Overseas
an important Chinese region Market Introduction Service specifically
largest investor in every province in for the PRD region.
China
main offshore centre for trading in Whilst the size and growth rate of the
Renminbi (RMB) Chinese currency Mainland China market offer excellent
well regulated banking system opportunities for UK businesses looking
worlds busiest airport for international to internationalise, approaching the
cargo Mainland China market directly can be
worlds third-busiest container port a daunting prospect.

Since the 1997 handover, Hong Kong


has remained a prosperous business
destination and there are ever-closer ties
with the economic development of the
Chinese mainland. A quarter of Chinas
trade passes through Hong Kong, which
is also the largest investor in every
province in China.

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As a major services centre and gateway A Gateway to South-East Asia
into China, Hong Kong is therefore a
very attractive indirect route, offering As well as being a major market in its own
the significant advantages of: right, Hong Kong is an excellent trading
gateway not just to mainland China but
Easy Access the Closer Economic also to the wider Asia-Pacific region.
Partnership Agreement (CEPA)
between China and Hong Kong gives Hong Kong is:
Hong Kong preferential access to
Chinas markets. UK companies can, situated in a central position between
in certain cases, take advantage East and South-East Asia
of this.
within five hours flying time of half the
Similar Business Systems With worlds population
similar legal and international
business support services, excellent leading telecommunications hub for
communication infrastructure, and Asia Pacific region
English as the business language,
doing business in Hong Kong is very a major base for the regional
similar to doing business in the UK. operations of international businesses

Transparent Government An easy the second largest private equity


place to do business: strong rule of centre in Asia
law; open, transparent Government
and free flow of information. the second largest stock market in
Asia and the sixth largest in the world
Intellectual Property Protection IPR
laws in Hong Kong are based on UK Hong Kong is the second largest Foreign
law and their enforcement is more Direct Investment (FDI) recipient in Asia
attractive for companies with high- after mainland China, a position it has
value intellectual property. held for 15 consecutive years.

Proximity The Pearl River Delta Opportunities in Hong Kong


(PRD), one of the key economic
regions of China often cited as the Opportunities exist for UK companies in
workshop of the world, is easily many business sectors in Hong Kong,
accessible by excellent rail, road and ranging from construction to consumer
air transport links, and it is easy to goods, education and training to
make day trips from Hong Kong. advanced engineering.

Knowledge Hong Kong agents Building a greener city, improving the


and distributors with their existing quality of urban space, harbour front
business links, extensive experience, enhancement and heritage adaptation
common language and culture are are also high on the agenda.
excellent partners for UK firms
wanting to access China. These projects offer solid opportunities
not just to UK firms in the construction
sector, but also to those in creative
industries, leisure and tourism and
environmental services.

www.China.DoingBusinessGuide.co.uk 41
CHINA
Doing Business in China

UK Trade and Investment (UKTI) publish A third runway expansion has been
over 1,000 business opportunities per commissioned, at a cost of over
month across all sectors and over 100 11 billion, to increase capacity beyond
markets. Sign up to receive regular 2030. It is a large scale project with an
business opportunities alerts at: estimated completion date of 2023.
www.businessopportunities.ukti.gov.uk/
home.html?guid=none Project requirements include:

Visit the website of the Treasury Branch reclamation of 650 hectares of land
of the Financial Services and Treasury construction of the third runway and
Bureau for details of government tenders related taxi systems
for goods and services at: development of navigation aids and
www.fstb.gov.hk/tb/en/information-on- airport facilities
government-tender.htm. The site extension of terminal 2
also provides a guide to government development of the midfield freighter
procurement in Hong Kong. apron
new baggage handling systems

High Value Opportunities in Contact UKTI Hong Kong at


Hong Kong commercial@bcg.org.hk for more
information on opportunities at
A number of Major Infrastructure Projects Hong Kongs airport.
are currently underway, with 29 billion of
investment scheduled up to 2015-16. 2. Environment

UKTI has identified seven High Value Hong Kongs government is currently
Opportunities (HVOs) for British business developing a strategy to tackle
in Hong Kong with opportunities worth environmental issues. This is through
well over 5 billion a year. The UK has the development of schemes for:
had considerable success in the past
principally in design, consulting and landfill expansion
project management. Organic Waste Treatment Facilities
(OWTF)
There is also a strong focus on supply integrated waste management
chain opportunities that exist within these facilities
project life cycles: electric vehicles and their associated
support infrastructure
1. Hong Kong Airport green buildings
Harbour Area Treatment Scheme
Hong Kongs Chek Lap Kok international (HATS)
airport was opened in 1998. However, its
already reaching capacity as the region Contact UKTI Hong Kong at
becomes a major global hub for business, commercial@bcg.org.hk for more
trade and tourism. information on environmental
opportunities.

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3. Healthcare Other major projects include:

Hong Kong has a rapidly aging population. sports stadium


Its interested in increasing cooperation hospitals
on healthcare offering strong commercial hotel belt with six potential sites for
opportunities for UK companies. high-end hotels adjacent to the cruise
terminal
Increased dialogue and research elevated monorail system
collaboration between the UK, Hong Kong landscaped open spaces
and Mainland China can also lead to
longer-term opportunities. Sector opportunities: Construction,
engineering, financial services, logistics,
Opportunities to develop partnerships environment.
include:
Contact UKTI Hong Kong at
hospital building and redevelopment commercial@bcg.org.hk for more
projects worth 4.9 billion (from now information on opportunities at KTD.
to 2022)
5. West Kowloon Cultural District
promotion of UK expertise present in (WKCD)
Hong Kong to win business in PRD
region of Mainland China WKCD is one of the worlds largest
cultural projects which covers 40
Contact UKTI Hong Kong at hectares.
commercial@bcg.org.hk for more
information on healthcare opportunities. It will comprise 17 venues under the
management of the West Kowloon
4. Kai Tak Development (KTD) Cultural District Authority including:

KTD is a huge and highly complex urban a new museum of visual culture
regeneration development project. Its numerous theatres
being transformed into a green and concert halls
quality environment with major sporting, other performance venues
leisure and tourism facilities. large green space

It spans 320 hectares covering the: UK companies are directly involved


across the supply chain for this project.
former Hong Kong airport site Opportunities for UK companies include:
adjoining hinterland districts of
Kowloon City, Wong Tai Sin and design and installation of
Kwun Tong entertainment attractions
audio visual technologies
The scheme includes an international digital media content, audience
cruise terminal. Construction is now in engagement and development
the final stage, but a second berth will interpretation and exhibition design
be commissioned this year. artistic and cultural content
management and operation of world-
class multi-use stadia and venues

www.China.DoingBusinessGuide.co.uk 43
CHINA

Sector opportunities: Construction, Hong Kong has a 15 year railway


creative industries, engineering, financial development programme. Future plans
services. include a:

Contact UKTI Hong Kong at Northern Link


commercial@bcg.org.hk for more South Island Line (West)
information on opportunities at WKCD. North Island Link
West Express Line linking Hong Kong
6. Hong Kong-Zhuhai-Macau bridge International Airport with Shenzhen
Airport
The 30 km long Hong Kong-Zhuhai-
Macau bridge will be the longest sea UK companies that get involved in these
bridge in the world when it is completed projects at an early stage can expect
in 2016. It is one of the most technically numerous follow-on opportunities.
complicated projects in transport history
as it includes an underwater tunnel Sector opportunities: Railway, construction,
section. engineering, financial services

The bridge will be a six-lane expressway. Contact the UKTI team in Hong Kong
It will: at commercial@bcg.org.hk for more
information on rail opportunities in
bring closer economic ties with the Hong Kong.
Pearl River Delta (PRD) region
allow 24/7 border crossings
Other opportunities
Sector opportunities: Construction,
logistics, engineering, financial services In addition to the seven High Value
Opportunities listed above, there are a
Contact the UKTI team in Hong Kong number of other major projects where
at commercial@bcg.org.hk for more UK businesses could become involved,
information on opportunities relating to including:
the Hong Kong-Zhuhai-Macau bridge.
The Guangzhou-Shenzhen-Hong Kong
7. Transport Express Railway Link part of the high-
speed railway that connects Hong Kong
The Shatin to Central link is a major rail- with Guangzhou. The travel time between
way network extension project consisting the two cities will be reduced to 48
of two sections and the construction of ten minutes upon completion. The Hong Kong
new stations. The East-West line will run section will be completely in tunnel; The
for 11 km between Tai Wan and Hung Tuen Mun Western Bypass and Tuen
Hom. The North-South line will run 6 km Mun-Chek Lap Kok Link a 27.2 km road
between Hung Hom and Hong Kong partly in under-sea tunnels to connect
Island. Hong Kongs airport with the western

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Doing Business in China

part of the New Territories to reduce the


distance between the airport and the
Macau
Hong Kong-Shenzhen border.
Similarly to Hong Kong, Macau is also
Hong Kong-Shenzhen Airport Co-operation administrated under the one country,
a 42 km rail link to be built between the two systems rule and the city-region
airports of Hong Kong and Shenzhen. offers opportunities in sectors such as
This will foster better division of labour gaming/leisure, tourism and infrastructure.
between the two airports, with the Hong
Kong airport positioned as a hub for In parallel with the expansion of the gaming
international flights and Shenzhens as and tourism sectors, the construction
a hub for domestic flights. and retail sectors in Macau have also
experienced strong growth. Due to open
Hong Kong-Shenzhen Joint Development late 2015 or early 2016, Wynn Macau Ltd
of the Lok Ma Chau Loop an 84-hectare will be home to the gaming operators first
area on the bank of the Shenzhen River Cotai property with investment of around
separating Hong Kong from Shenzhen, US $4 billion. Galaxy Entertainment
to be developed into a low-carbon Group announced recently that they will
community with a concentration of tertiary invest US $2.1 billion into phase two of
institutions and creative industries. Galaxy Macau, Cotai, with a scheduled
completion for mid-2015. In addition to
enlarging the gaming space, the retail
boulevard will be expanded to more than
100,000 sq m.

As well as construction and retail, other


significant areas of opportunity for UK
companies in Macau are in the education
and training, transport, ICT and
environment sectors.

Hong Kong/Macau events, trade fairs


and missions
Hong Kong and Macau host numerous
trade fairs and exhibitions that attract
visitors and exhibitors from around the
world. UKTI also assist a large number of
British companies to visit Hong Kong and
Macau to develop new business partner-
ships.

www.China.DoingBusinessGuide.co.uk 45
CHINA
Doing Business in China

As well as being an excellent What companies should consider when


introduction to a new market, there are doing business in Hong Kong
many benefits to participating in a trade Hong Kong offers opportunities to UK
mission: companies across many sectors. If you
are considering trying to enter the Hong
hassle-free travel arrangements Kong market, your first step should be to
escort by an experienced mission undertake research into the likely demand
leader for your goods/services. UKTI advisers
briefing from the Trade Commissioner are well placed to help with this and your
on the latest market conditions local office can discuss this with you in
meet UKTI sector specialists at the more depth.
Consulate-General
learn from the shared experiences of Locations Key areas for business
the other delegates in Hong Kong
meet new customers Hong Kong's total land area is only 1,104
research competitors and benchmark sq km (about 420 sq miles) and the vast
your product/service majority of businesses are located in the
raise your company profile densely populated urban areas.
demonstrate your commitment to the
market The urban areas can all be reached within
an hour of each other by public transport.
UKTI Hong Kong can assist you before, Hong Kong's government and the most
during and after your visit to ensure you prestigious business offices are located
get the most out of your time in the on the northern edge of Hong Kong
market. Contact UKTI Hong Kong Island. Other major business areas are
(see page 53) for details of Kowloon, and the new town of Shatin in
upcoming missions to Hong Kong. the New Territories.

Hong Kong market entry and start-up


How to do business in Hong Kong considerations

Most companies find that having a local The most appropriate and effective way
business partner (such as an agent or to enter the Hong Kong market for your
distributor) is the most successful company and its goods/services, will
approach to start exporting successfully to depend on a variety of factors. Your local
Hong Kong. Licensing or franchising may UKTI office can advise you on how to
also be viable options for some products commission a tailored report for your
and services. Throughout the process, specific needs.
personal relationships are considered
very important, so a visit to Hong Kong
early on is highly recommended. You may
find that without visiting the market in
person, you are unable to get very far
in the process.

Visit the Website and download the free Mobile App


You should appoint an agent or distributor There are only three direct taxes
to successfully develop your business in on profits, salaries and property, none
Hong Kong. You will need to visit the of which exceed 17% and with multiple
market to establish a personal relation- deductions. There is no VAT or sales tax.
ship with a business partner. Licensing The Hong Kong Inland Revenue Depart-
or franchising may also be viable options ment gives clear instructions on payment
for some products and services. and procedures relating to tax. See:
www.ird.gov.hk/eng/welcome.htm
UK companies entering into agreements
in Hong Kong should take professional Hong Kong Customs
legal advice. Hong Kong Customs and Excise
Department generally carries out
Legal considerations inspections quickly and efficiently, and
The legal framework in Hong Kong is as a result goods are rarely held up on
very similar to that of the UK. Many of entry to Hong Kong. Hong Kong is a free
the lawyers operating in Hong Kong have port and goods are not subject to import
been trained in the UK and almost all are duty with the exception of liquors (30%
fluent in English. and above alcohol by volume), tobacco,
hydrocarbon oil and methyl alcohol. If you
You can find a full list of lawyers operating are importing these items you will need to
in Hong Kong and the areas they cover obtain an import and export licence from
see The Law Society of Hong Kongs the Customs and Excise Department,
website at: and you will also need a removal permit
www.hklawsoc.org.hk/pub_e/lawfirm should you wish to re-export them.
directory/
There are a number of goods which
Standards and technical regulations cannot be imported without a licence,
The Hong Kong Customs and Excise but are not subject to duty. These include
Department is responsible for consumer pharmaceutical products and certain
protection for consumer goods, toys and foodstuffs. You can find a full list of
childrens products. these items on the Customs and
See: www.customs.gov.hk/en/ Excise Department website.
consumer_protection/index.html See: www.customs.gov.hk

The Hong Kong Centre for Food Safety Entry requirements


provides information on regulations UK passport holders do not require a visa
relating to food and drugs labelling. See: to enter Hong Kong. As a visitor you can
www.cfs.gov.hk/english/food_leg/food_ normally be allowed to stay for up to 90
leg_nl_guidance.html days. You can get a visa or entry permit to
work in Hong Kong via the Hong Kong
Pre-packaged foods must be labelled Immigration Service:
with mandatory nutritional information. www.immd.gov.hk/eng/services/visas/visit
Any nutritional claims about the contents -transit/visit-visa-entry-permit.html
must comply with the regulations. Food
and formula consumed by children under Hong Kong Local regulations
the age of 36 months and food for special Some businesses require a licence
dietary uses are exempt. or registration to operate, including
restaurants, bars, banks, travel agencies,
Hong Kong Tax law firms, and others.
Hong Kong has one of the lowest tax
rates and simplest tax structures in the
world.

www.China.DoingBusinessGuide.co.uk 49
CHINA
Doing Business in China

You can get a complete list of licences It is not unusual in Hong Kong for staff to
required from the Business Licence change jobs frequently and in times of eco-
Information Service of the Hong Kong nomic boom it can be difficult to retain staff.
Trade and Industry Department:
https://www.success.tid.gov.hk/tid/eng/blic Getting your Goods to Hong Kong
s/index.jsp Hong Kong has the world's busiest airport
for international cargoes and the world's
Hong Kong Responding to Tenders third busiest container port so it follows
Government tenders are published in that air and sea are the main routes for
the local press and on the Government goods entering Hong Kong. There are
Gazette at: numerous shipping companies that can
www.gld.gov.hk/egazette/?lang=e&agree=0 help with the logistics of getting your
goods to Hong Kong.
UKTI reviews all tenders issued and
publishes those they consider to offer Hong Kong Intellectual Property Rights
opportunities for UK companies, on the The importance and need for protection
UKTI portal under the "Business of intellectual property (IP) has long been
Opportunities" section. Notifications of recognised in Hong Kong, and has been
new opportunities are automatically sent crucial in its development as an
to companies which have registered their international trading centre. Hong Kong
interest under the relevant category. established its first trademark laws in
However, the HK Government will not 1873 one of the worlds oldest laws
consider late tenders. This is a strict of this kind.
rule intended to prevent the possibility
of corruption. Based on the One Country Two Systems
principal, Hong Kongs laws and judicial
Recruiting and Retaining Staff in system, including its regulations relating
Hong Kong to IP, are independent from the Chinese
A large pool of highly educated talent is system. Hong Kongs law is based on the
available in Hong Kong for local employ- Common Law system, and its IP system
ment, many of whom have a high level is similarly based on the UKs IP
of English. An increasing number are also legislation. Hong Kong is also a member
fluent in Mandarin Chinese, helping you of the World Trade Organisation in its own
open the door to opportunities in Mainland right, thus bound by international agree-
China. Employment regulations are ments such as that on Trade-Related
straightforward with details available Aspects of Intellectual Property Rights
from the Labour Department. (TRIPS). The IP laws of Hong Kong are
therefore familiar to UK companies and
There are numerous recruitment comply with international standards.
agencies in Hong Kong, many of them
local branches of well-known international The Hong Kong SAR Government
companies. Another route for recruitment has a dedicated Intellectual Property
is to place an advert in the Saturday Department (IPD: www.ipd.gov.hk)
edition of the South China Morning Post. to handle registrations and concerns.

Visit the Website and download the free Mobile App


The Customs and Excise Department meet you several times to get to know
(www.customs.gov.hk) is responsible for you before concluding negotiations. This
enforcement and conducts inspections may include meeting for meals as well
at the border and investigations in the as formal meetings in offices.
territory. Both departments work closely
with their international counterparts to The giving and receiving of gifts is viewed
ensure the protection of international as a way to build up relationships with
trade. The IPD provides electronic filing business partners and clients. It is not
systems for all registrations. You may necessary to give expensive gifts as it is
also search the respective databases the act of giving that is more important.
online before filing to ensure acceptance
of your application. Hong Kong What are the challenges?
Being one of the easiest places in the
Hong Kong Business Culture world to do business, Hong Kong
In general, the business culture in Hong generally presents less challenges for UK
Kong is quite similar to western culture companies than most overseas markets.
and people in Hong Kong are sufficiently
familiar with Western customs to be Corruption is not common and is
tolerant of cultural differences. considered a serious crime in Hong Kong,
with a dedicated bureau (Independent
Language in Hong Kong Commission Against Corruption ICAC)
set up to tackle corruption through
The official languages of Hong Kong are enforcement, prevention and community
Chinese (Cantonese dialect) and English. education.
English is widely spoken in the business
world and in urban areas of Hong Kong. Getting Paid in Hong Kong
When getting a taxi, it can be useful to Terms of Payment
have the address written in Chinese to Most UK companies who do business
show the taxi driver, although most taxi in Hong Kong find that they receive
drivers are familiar with the English payments smoothly and to agreed
names of popular destinations. timescales. Any companies experiencing
difficulties getting paid should get legal
In many fields, sales and marketing advice locally.
materials in English is sufficient, but in
some cases, there may be advantages For companies looking to open a bank
in having materials prepared in Chinese. account locally, most international firms
The UKTI team in Hong Kong can give operating in London will also have offices
advice on this on a case-by-case basis. here, offering familiar service and a
The traditional form of written Chinese is smooth transition. You should consider
used in Hong Kong (on the Mainland the the wide range of options before choosing
simplified form is used). Any Chinese the most suitable for your business.
language materials you prepare for the Besides the branches of international
Hong Kong market should therefore institutions, there is also a multitude of
use traditional Chinese meaning any local banks in Hong Kong. The banks
material prepared for the Mainland can provide details on the documents
China market will not be suitable, and necessary to open a company account.
vice-versa.
Source: UKTI 2014
Hong Kong Negotiations
Face-to-face meetings and building
relationships is considered important in
Hong Kong and contacts may wish to

www.China.DoingBusinessGuide.co.uk 51
Doing Business in China

Hong Kong Contacts Hong Kong Labour Department:


www.labour.gov.hk
If you have a specific export enquiry
about the Hong Kong market which is not Hong Kong Business License Information
answered by the information in this guide, Service, Trade and Industry Department:
you may contact: www.success.tid.gov.hk/tid/eng/blics/index.
jsp
UK Trade & Investment
British Consulate-General Hong Kong Hong Kong Domain Name Registry:
Assistant Trade Commissioner www.hkdnr.hk
1 Supreme Court Road, Hong Kong
Law Society of Hong Kong: www.hklaw-
Telephone: +852 2901 3360 soc.org.hk/pub_e/lawfirmdirectory/
Email: commercial@bcg.org.hk
Hong Kong Centre for Food Safety:
http://www.cfs.gov.hk/eindex.html
Other Hong Kong Resources:
Hong Kong Government Gazette:
British Chamber of Commerce: www.gld.gov.hk/egazette/?lang=e&agree=0
www.britcham.com
Hong Kong Customs:
Hong Kong Trade Development Council www.customs.gov.hk
(HKTDC): www.hktdc.com/en-buyer
Hong Kong Intellectual Property
Hong Kong Trade & Industry Department: Department: www.ipd.gov.hk
www.success.tid.gov.hk/tid/eng/blics/
index.jsp

Macau Trade and Investment Promotion


Institute (IPIM): www.ipim.gov.mo

British Business Association of Macao


(BBAM): www.britchammacao.org

InvestHK: www.investhk.gov.hk

Hong Kong Companies Registry:


www.cr.gov.hk

Hong Kong Inland Revenue Department:


www.ird.gov.hk

Hong Kong Immigration Department:


www.immd.gov.hk

www.China.DoingBusinessGuide.co.uk 53
CHINA
Doing Business in China

TAIWAN Benefits for British businesses exporting


to Taiwan include:

Background major platform for business with


Taiwan is strategically located at the heart China
of the Asia Pacific region. Its economy is liberalisation of banking, insurance
now the 27th largest in the world according and securities sectors
to the Centre for Economics and Business offshore centre for the Renminbi
Research (CEBR). Taiwan has averaged (RMB), Chinas official currency
6% annual growth in Gross Domestic high levels of consumer disposable
Product (GDP) over the last three decades. income
sound legal environment with
Taiwan is the 16th largest trading power comprehensive protection of
in the world, according to the World Trade Intellectual Property Rights (IPR)
Organization(WTO), with an economy
founded on high-tech and creative Strengths of the Taiwanese market
industries. The Economist Intelligence include:
Unit (EIU) ranks Taiwan as the 13th best
place in the world to do business to 2017. 16th in the World Banks annual
Ease of Doing Business ranking
Taiwans GDP is the 19th largest in the worlds biggest manufacturer of
world on a purchasing power basis. computer related products and
Taiwanese have more disposable income semiconductors
than counterparts in Japan, France or the logistics hub for the Asia-Pacific
UK. Increasing wealth is resulting in a region
growth in consumption including demand modern infrastructure
for foreign imports. 40% of goods skilled workforce, abundant capital,
consumed are imported. and excellent innovation capabilities
more RMB deposits than anywhere
else except Hong Kong
Benefits for UK companies
Links to mainland China
Taiwan rose to global economic recognition There is potential to leverage the
in the 1980s as one of the Asian Tigers. considerable common ground on
Having a stable legal system and financial business, culture and language that the
industry, Taiwan has specific strength in Taiwanese share with the mainland and
offering competitive and innovative other Asian countries.
manufacturing solutions to global
companies. With a high degree of global Taiwan is a major investor in China with
supply chain integration, UK companies more than 70,000 Taiwanese companies
may find Taiwan an attractive destination operating on the mainland. Up to 70%
to provide value-added products and of Chinese electronics are produced by
services. Taiwanese-invested firms and some
500,000 Taiwanese live in Shanghai

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alone. Cross-straits relations have Taiwan depositary receipts. Taiwan
improved significantly since 2008, direct encourages mergers and acquisitions that
flights are now permitted and Chinese serve the public interest and protection is
investment is allowed to enter the Taiwan provided to foreign patents, trademarks
market. and copyrights.

Taiwan's strategic location is one of Since Taiwan joined the World Trade
its most significant advantages for Organisation in 2002, it has opened
international investors. It is ideally up its domestic market to international
situated adjacent to China and within investment and there are now very few
easy reach of major commercial centres industries that are closed to foreign
and ports in the ASEAN (Association of investors the industries where foreign
South East Asian Nations) region. For investment is restricted mainly focus on
example, the sailing time from Taiwan's agriculture, forestry, fisheries and animal
largest port, Kaohsiung, to five of the husbandry. Talk to UKTI Taiwan for more
largest Asia-Pacific ports (Hong Kong, details.
Manila, Shanghai, Tokyo and Singapore)
is just over two days. This makes Taiwan Around 300 UK companies already have
a favoured choice for headquarters in the a significant presence in Taiwan, including
Asia-Pacific region, as well as for R&D BP, HSBC, Standard Chartered Bank,
facilities. Barclays, Arup and Mott Macdonald. UK
retailers have been well-received, with
With direct flights having been introduced fashion labels such as Burberry, Vivienne
in 2008, travellers can now fly on over Westwood, Paul Smith, Dunhill, Aquascutum,
600 flights per week between Taiwan and Ted Baker, Gieves & Hawkes, Oasis and
major cities in China with a journey time French Connection all gaining a foothold
of just one to two hours, and the number in the marketplace. Smaller, specialist UK
of flights is likely to rise. companies have also invested in Taiwan,
including suppliers to the vast semicon-
The continuing liberalisation of links ductor industry and specialist chemical
across the Taiwan Strait means that company, Epichem.
foreign companies are increasingly
choosing Taiwan both as a market in its Taiwan is actively promoting the
own right and as a stepping stone into development of six emerging industries:
China. biotechnology, green energy, culture and
creativity, medicine and healthcare,
Taiwan signed the Economic tourism and high-end agriculture. It is also
Cooperation Framework Agreement focusing on four intelligent industries:
(ECFA) with China in 2010 to reduce smart electric vehicles, smart green
tariffs and commercial barriers between buildings, cloud computing and patent
the two markets. This is expected to commercialisation. There are incentives
boost bilateral trade significantly. available to attract foreign and domestic
investors in these priority sectors. You can
Taiwan's pro-investment policies and find more information on the official Invest
incentives are another major pull for in Taiwan website at
investors. Free competition is encouraged www.investtaiwan.nat.gov.tw/library/
and there are price controls only on basic main_eng_general.jsp
necessities. Qualified foreign companies
can obtain listings on the Taiwan stock
market by listing their shares or issuing

www.China.DoingBusinessGuide.co.uk 55
CHINA

High-value opportunities in Taiwan For more information contact


Andrew Scott-Green:
HVO Transport projects andrew.scottgreen@uktispecialist.com

The Taiwanese authorities have


announced ambitious plans to build HVO New Energy projects
new metro lines, extend high speed rail
stations, and major upgrades to traditional Taiwan announced its first off-shore wind
railways (mainlines) in Taiwan with pilot project in July 2012: three wind farms
projects up to 2030. Taipei City will lead will be selected for this programme. Each
on projects in Taipei, New Taipei City and project will have a capacity of between
Taichung City for both new metro lines 100MW to 600MW. These projects are
and extensions of six metro lines and expected to generate 10.4 billion in
there will be potential plans for light business opportunities for local and
rail projects for Taoyuan and Kaohsiung international equipment manufacturers,
cities. In addition, there will be three new industry supply chain and services.
stations for high speed rail, and major There is also a national programme to set
maintenance signalling upgrades for up the guidelines and a major pilot study
traditional railways. on marine and ocean current energy.

For more information contact Due to the impact of Japan's Fukushima


Andrew Scott-Green: nuclear incident, Taiwan announced in
andrew.scottgreen@uktispecialist.com November 2011 it will decommission the
No. 1 Nuclear Power Plant by 2018,
No.2 by 2021, and No.3 by 2024. Taiwan
HVO Urban Infrastructure project Power Company and UKs Nuclear
Decommissioning Authority (NDA) have
This project covers four eco-city pilots signed a MoU to set up a UK and Taiwan
with an estimated investment of 1.2 co-operation framework for the nuclear
billion with an ultimate goal of forming decommissioning programme. The
four low-carbon living zones by 2020, potential contract value to decommission
to be rolled out to 16 cities by 2050. the three nuclear plants is 1.4 billion.
In addition to the four pilot cities, Taipei
City has allocated a 168 million budget UKTI has produced a Taiwan business
to develop its low carbon city plan. Also, guide which is available from:
Taipei City will host the 2017 Universiade www.gov.uk/government/publications/
(world student games) when 12,000 exporting-to-taiwan
athletes from 160 countries are expected
to attend. The total budget for the 2017
Universiade is 790 million, of which
30% is expected to support low carbon
initiatives, messaging and the construction
of stadia and a new low carbon athletic
village.

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Doing Business in China

Taiwan contacts:

If you have a specific export enquiry


about the Taiwanese market which is
not answered by the information on this
report, you can contact:

British Trade a Cultural Office (BTCO)


26th Floor, President International Tower
9-11 Song Gao Road
Xin Yi District
Taipei 11073
Taiwan

Tel: +886 (2) 8758 2088


Fax: +886 (2) 8758 2050
Email: info.taipei@fco.gov.uk
Website: www.gov.uk/government/world/
taiwan

British Chamber of Commerce in Taipei


(BCCT)
26th Floor, President International Tower
9-11 Song Gao Road
Xin Yi District
Taipei 11073
Taiwan

Tel: +886 (2) 2720 1919


Fax: +886 (2) 2720 9200
Email: info@bcctaipei.com
Website: www.bcctaipei.com

www.China.DoingBusinessGuide.co.uk 57
CHINA

There are significant divides in Chinas regional


economies. Coastal provinces in the Chinese eastern
seaboard are the most economically advanced, benefiting
from historical trade links and better infrastructure. These
regions were among the first to respond to the reform and
opening-up policy and have enjoyed sustained growth
spurred by export and investment.
www.China.DoingBusinessGuide.co.uk
59
CHOOSING THE RIGHT LOCATION IN MAINLAND CHINA
CHINA
Doing Business in China

Choosing the right location in


mainland China Moreover, factor input costs in China
are at their highest in these cities and the
Background costs of land and labour are rising fast. As
a consequence, many British companies
There are significant divides in Chinas with a presence in these cities are actively
regional economies. Coastal provinces seeking fresh business opportunities in a
in the Chinese eastern seaboard are the variety of Chinas regional cities.
most economically advanced, benefiting
from historical trade links and better In addition, the Chinese economy is
infrastructure. These regions were among increasingly seeking growth driven
the first to respond to the reform and by domestic dynamism, particularly
opening-up policy and have enjoyed consumption and development in inland
sustained growth spurred by export and and rural areas. Often the rate of
investment. It is also noticeable that the development in the lower-tier cities is
majority (70%) of the Chinese population faster, and international competition is
live in the eastern part of China. By often lower.
contrast the vast inland regions in China
are more domestically orientated and There are a number of regional economic
more abundant in natural resources. hubs within China, where several cities
However, many of these regions are still interact to create a wider economic area.
developing to catch up with the coastal The most significant are the Bohai Rim
areas. region, the Yangtze River Delta region
and the Pearl River Delta region. See the
The question of where to start is often Regional city clusters section on page 66.
asked by companies who are new to the
market, and those who seek business Economic overview
expansion. China offers a wide variety of The global financial crisis and recession
potential locations, and beyond the more which began in 2008 has changed the
familiar established regions and cities it international economic landscape. China
can be difficult for firms to choose. was not immune to this and the country
launched its own financial stimulus
Traditionally, business interest from British package of US $400 billion in late 2008.
companies has generally focused on a As a consequence of the global economic
few business hot spots, first-tier cities challenges, annual inward foreign direct
such as Beijing, Shanghai, Guangzhou investment shrunk by a third in 2008 but
and Shenzhen. However, business has recovered since. The positive
conditions in these cities are evolving development is reflected by the Chinese
quickly. In particular, numerous British economy being valued at US $5.8 trillion
companies are experiencing mature and in 2010, overtaking Japan to become the
increasingly saturated markets in these second-largest economy behind the USA.
locations, with only niche opportunities
for development, and growing competitive
pressures from other foreign firms and
increasingly sophisticated Chinese
companies.
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Chinas economy continues to grow In addition to economic and social
around 7.5% per annum. In recent years, targets, this plan set out clear environ-
the less populated, less developed mental objectives. Although the content
western and central regions have of this plan has been developing during
outperformed the historic economic the five-year period, it's therefore now
growth engines of the Eastern Coast. worth reassessing the opportunities for
A number of factors have brought this British industry in China and, in particular,
about, including a policy shift from in its regional cities in light of these
prioritising export driven growth to one developments. As always though,
driven more by domestic consumption opportunities on-the-ground are evolving
and a stronger integration of the very quickly, so it is best to contact the
provincial economies. One of the CBBC for the latest developments.
most important factors is the national
governments stimulus package which The predicted surge in urbanisation
has, among other things, directed presents challenges for the Chinese
funds towards major transportation authorities which are recognised in the
infrastructure projects in Western and 12th Five Year Plan: greater emphasis is
Central China and which has promoted placed on education, sustainable housing
the development and opening of new and infrastructure, universal healthcare,
domestic markets. environmental protection and the
expansion of financial services. These
To illustrate, the municipality of internal challenges of urbanisation in all
Chongqing, home to some 32 million Chinas cities match many of the UKs
people, recorded a gross domestic manufacturing and service skills, which
product growth of 17.1% from 2009 to therefore opens opportunities for UK
2010, driven largely by infrastructure businesses.
construction investments but with
significant increases in the manufacturing Bear in mind that the next (13th) Five Year
and service industries. This is mirrored by Plan will run from next year (2016), and
similar levels of economic growth in other although it has not yet been announced,
regional cities. it is very likely that environmental issues
will be high on the agenda.
China's 12th Five Year Plan
The current Five Year Plan was launched
in March 2011, giving a clear indication of
the government-supported priorities
nationally both by province and city.

www.China.DoingBusinessGuide.co.uk 61
CHINA

The focus of Chinas current Five The manufacturing centre for exports
Year Plan requires greater domestic remains firmly situated in and around
technological development and upgrading Guangzhou and Shenzhen with their
along the value chain. British firms good links to Hong Kong and international
can benefit from this by being better transportation hubs. However, the
integrated into the supply chain of situation is evolving quickly.
multinational enterprises operating in
China or into those of national Chinese For many British companies that have
firms. Likewise, British firms can exploit spotted business opportunities outside of
their expertise and explore new business the major conurbations of China, it will be
models in joint research and development more appropriate for them to build public
projects with Chinese organisations. relations activities with local governments
In the aerospace industry, for example, rather than in Beijing.
Airbus and Rolls-Royce have supply
chain and training centres in Tianjin, Increasingly, professional services
40 minutes south-east of Beijing by companies are following their interna-
high-speed rail, and Rolls-Royce is jointly tional manufacturing clients into regional
developing products with two major cities in China and financial services are
domestic suppliers from Xian and establishing new offices in those cities
Chengdu, the gateways to West China. that are opening specialised exchanges.
Similarly, manufacturers are benefitting
At the same time, Chinese middle to from lower operational costs and
high-end consumers are becoming improving infrastructure into the
increasingly sophisticated and demanding. Chinese hinterland.
China surpassed the USA as the largest
national market for cars with sales of 19.3 In addition to the four major cities of
million units in 2012, of which two-thirds Beijing, Shanghai, Guangzhou and
are foreign marques manufactured by five Shenzhen there are arguably a further
Sino-foreign joint ventures. Baotou, the 270 cities in China with a population in
Inner Mongolian cashmere and mining excess of one million. Across these
city, has the highest number of luxury highly populated cities there are other
cars (including Rolls-Royce and Bentley) factors evident to different degrees.
per capita in China. These include the level of economic and
social development, industry structure
In the past, British businesses have and business environment.
focused their investments and operations
in Beijing, Guangzhou, Shanghai, and As costs in more developed areas
Shenzhen for good reasons. As the continue to rise and markets become
national capital, Beijing will always attract more saturated, businesses are
the public relations operations of foreign increasingly moving inland. The research
firms. Shanghai is the largest commercial company Mintel suggests that with the
centre in China and is home to the worlds recent growth of e-commerce, its now
leading financial and professional service very common for consumers in 2nd and
companies. 3rd-tier cities to purchase on-line and have
their goods delivered the same day.

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Doing Business in China

If British companies can resolve the The heterogeneity in economic growth,


challenge of localised logistics then this operational costs, competitiveness in local
can offer a wide range of opportunities B2B and B2C markets, local government
across a broad number of sectors to UK support and policy momentum in respect
companies. Clearly, those companies of regional development and the business
seeking to serve local consumer markets projects provide both opportunities and
in China will be attracted by the economic challenges for firms to identify and select
expansion, rising purchasing power and the optimum location in China.
growing populations that the rapid
urbanisation of Chinas regional cities The choice of city will be influenced by
has engendered. the strategic objectives of the company
and the types of activity it wishes to
The location opportunities for those undertake. The CBBC can help you to
companies looking to manufacture only, identify where the best opportunities can
are more likely to be found in those cities be found among Chinas regional cities,
near to the coast, from the far Northeast while taking activity type and industrial
to the South of China. Recognition sector into account.
of local resources, client clustering,
adequate logistics and governmental See also, the Marketing section of this
support within this wide area then guide, beginning on page 131, for more
becomes important. Furthermore, there information on developing a regionalised
is a strong match between the best R&D marketing strategy.
location and the density of leading
Chinese universities. Hangzhou, Suzhou
and Tianjin should be priority regional
cities for any firm looking to locate
production and R&D in China.

The rate of urbanisation and economic


growth together with the government-
supported development initiatives in
each of Chinas cities offers considerable
opportunities across all business sectors
for British companies. The more economi-
cally advanced the city it follows that
the demand and solutions become more
niche. The business opportunities tend
to be higher up the value chain in those
more economically advanced cities
matching the skill set offered by UK
industry and commerce, especially for
SMEs.

www.China.DoingBusinessGuide.co.uk 63
CHINA
Doing Business in China

Regional City Clusters 12 such City Clusters have been


identified across China, namely:
City Clusters is a term used to describe
a group of cities in close proximity to each Fujian - the cities of Fujian Province
other. At the same time, they are also
distant from the next nearest cluster Hei-Ji - the cities of Heilongjiang
creating an obvious identity of their own. Province (abbreviated to the single
Chinese character hei) and Jilin
Province (abbreviated to the single
character ji)

Henan - the cities of Henan Province,


north and western Jiangsu Province
and Anhui Province

Hubei - the cities of Hubei Province

Hunan - the cities of Hunan Province


and western Jiangxi Province

Inner Mongolia - the cities of Inner


Mongolia and northern Shanxi

Jing-Jin-Ji - the municipalities of


Beijing and Tianjin and the cities of
Hebei Province (abbreviated to the
single Chinese character "ji)

Liaoning - the cities in central and


southern Liaoning Province

Pearl River Delta (PRD) - the cities


around the Pearl River in Guangdong
As well as this geographic identity the Province
City Clusters are also areas determined
by their demographic characteristics of Shandong - the cities of Shandong
high population and high population Province
density.
Sichuan - Chongqing Municipality and
cities in Sichuan Province

Yangtze River Delta (YRD) -


Shanghai municipality and cities in
Zhejiang and Jiangsu Province

Visit the Website and download the free Mobile App


In total these 12 City Clusters encom- For companies who are able to define a
pass 157 of the 287 cities which are client base, either consumer or corporate,
referred to by Chinese state statistical within a City Cluster it is important to
reporting bureaux. More accurately, note that marketing activity to raise client
these cities are Prefecture Level Cities awareness may be localised. Successful
which link smaller outlying cities, towns brand recognition in one City Cluster
and districts to one major city. For example, does not automatically lead to recognition
the Prefecture Level City of Suzhou in outside that cluster. As each of these
Jiangsu Province comprises the seven clusters is similar in size both by
districts of Suzhou City and the five County population and land mass to the UK,
Level Cities of Changshu, Taicang, this leads to the potential of a more
Kunshan, Wujiang and Zhangjiagang. manageable market entry strategy,
particularly for SMEs.
Prefecture Level cities also contain
regions of agricultural production and City Clusters therefore offer a defined
are not purely metropolitan areas. geographical perspective of what can
They also have common political status otherwise be a vast and intimidating
and economic reporting processes. This market. Most of the clusters are within
means that the market access and market the constraints of a single province and
data for these cities is standardised and so the politically driven economic direction
form a more suitable basis for comparison for the cluster can be more easily
rather than equating a County Level City determined. As areas of large population,
with a Prefecture Level City. the size of the client base for either
consumer or corporate markets supports
For sales, a key attractiveness of a sustainable business model. Infrastruc-
City Clusters is the ease of access to ture, physical and business services are
a large population within a defined area well established.
generating sales efficiency. The connec-
tivity of different cities in a cluster has These individual clusters are areas where
been developed with huge investment in the marketing of a product or service can
road and highway construction in recent be launched and maintained. For all these
years and is now one of the defining reasons, for companies making a market
characteristics of a cluster. entry and even for companies who have
a presence in another region of China,
Though it is often said that China is a adopting a City Cluster perspective can
land of regions differentiated by local offer structure to the modelling of their
languages, foods and customs, this is an development strategy.
oversimplification of the country and does
not relate to the needs of companies. See also the Marketing section in this
Issues relating to law, taxation, product guide, beginning on page 131.
quality and government procurement are
certainly national. However, what is more
relevant to business is the identification
of sources of raw materials, supply chain
and clients that can be most efficiently
joined through a companys manufacturing
and sales bases and networks.

www.China.DoingBusinessGuide.co.uk 65
CHINA

The Chinese economy has grown at just under 10% a


year for 32 years, overtaking Japan in 2010 to become
the worlds 2nd largest economy. According to the
OECDs International Comparison Programme (ICP),
China is projected to overtake the US in 2016 in
Purchasing Power Parity (PPP) terms.
www.China.DoingBusinessGuide.co.uk
69
SECTOR-SpECIFIC OppORTUNITIES IN MAINLAND CHINA
CHINA
Doing Business in China

Sector-specific opportunities Contact qiurong.zhang@fco.gov.uk


in mainland China for more information on opportunities in
Chinas advanced manufacturing sector.
Source: UKTI March 2015
Opportunities for UK Businesses
in China
2) AEROSPACE SECTOR
UK Trade & Investment (UKTI) publish
over 1,000 business opportunities per Airbus forecasts that China will need
month across all sectors and over 100 more than 5,300 new passenger aircraft
markets. Sign up to receive regular and freighters from 2014 to 2033, worth
business opportunities alerts at: USD $820 billion. This represents 17% of
www.businessopportunities.ukti.gov.uk/ world total demand in the next 20 years.
home.html?guid=none
There are also more airports being
planned and built than anywhere else
1) ADVANCED MANUFACTURING in the world. Commercial operators
SECTOR with access to low-level airspace will
massively increase the opportunities
China is the second largest energy for private fixed and rotary wing aircraft.
consumer in the world. It uses about 5 The Chinese space programme is large
to 15 times more water than equivalent and growing with increasing links to the
industries in the West. The Chinese UK.
government is introducing tough new
legislation and targets to change the There are opportunities for UK companies
way Chinese industry behaves. with products or technologies in:

The Chinese government plans to invest advanced manufacturing


237 billion in industry over the current automation
5-year plan to improve manufacturing composites materials and structures
efficiencies. aircraft interiors
avionics
Opportunities for UK companies include: the airline passenger experience
rotary wing vehicles
environmentally friendly process upstream and downstream satellite
equipment signal processing
energy saving technologies air and land-side airport equipment,
waste handling design and management
recycling equipment airport security
water recovery equipment
emissions filtration Contact qiurong.zhang@fco.gov.uk
control equipment for more information on opportunities
education and consultancy in modern in Chinas aerospace sector.
techniques in manufacturing Source: UKTI March 2015

Visit the Website and download the free Mobile App


3) AUTOMOTIVE SECTOR Contact patrik.li@fco.gov.uk for
more information on infrastructure
China is the worlds largest car market. opportunities.
Sales of 30 million domestic cars are Source: UKTI March 2015
forecast by 2020.The majority are
produced in China through wholly 5) CONSUMER & RETAIL SECTOR
Chinese owned manufacturers or Joint
Ventures (JV) with leading Western CBBCs report on Chinas middle income
automotive manufacturers. consumers outlines the huge changes
taking place in Chinese consumption.
Opportunities for UK companies are 12% retail growth is expected for the
available in: next three years.

local supply chain investment to China is now the worlds largest


modernise vehicle design and market for:
manufacture
low carbon vehicle technology, groceries
including electric vehicles luxury goods
fuel efficiency e-commerce
luxury imports
motorsport There are opportunities for UK
construction equipment companies in:
the aftermarket industry
selling products on one of Chinas
Contact qiurong.zhang@fco.gov.uk many e-commerce platforms
for more information on opportunities promoting products on social media
in Chinas automotive sector. luxury fashion
Source: UKTI March 2015 food and drink

Contact kirk.wilson@fco.gov.uk for


4) CONSTRUCTION SECTOR more information on retail opportunities
in China.
Real estate developers are now seeking Source: UKTI March 2015
to make large scale developments more
attractive and environmentally friendly.

Opportunities for UK companies include:

master planning
architectural design
property management
green building technology
interior design
design for leisure and aged care
air monitoring technology
soil remediation solutions
www.China.DoingBusinessGuide.co.uk 71
International Property &
Construction Consultants
EST. 1885

YEARS OF
130 EXPERIENCE
SPOTLIGHT ON

PARKSIDE
PLAZA
CHINA

6) CULTURE AND EXPERIENCE Chinas offshore reserves are in marginal


ECONOMY SECTOR fields. These require deep-water surveying,
more sophisticated geological modelling
There is strong Chinese government and the expertise to drill in high-pressure
backing for culture and sport. and high temperature environments.

Opportunities for UK companies include: Opportunities in Chinas oil and gas


production and supply include:
TV and animation programme
licensing and co-production safety
gaming, in particular mobile gaming subsea engineering
film, visual effects and post- High Pressure, High Temperature
production (HPHT) field developments
interior, product and industrial design oil and gas process machinery,
services equipment and technology
advertising and marketing deep water oil and gas developments
theme park and leisure attractions integrated services for the operation
museums and other cultural venues and maintenance of fields
promotion of elite sports such as late life operation of mature fields
equestrian, sailing and golf
Contact patrik.li@fco.gov.uk
Contact tom.simpson@fco.gov.uk for more information on opportunities
for more information on opportunities in the oil and gas sector.
in Chinas culture and the Experience Source: UKTI March 2015
Economy sector.
Source: UKTI March 2015
8) FINANCIAL, PROFESSIONAL &
BUSINESS SERVICES SECTOR
7) OIL & GAS SECTOR
Liberalisation and more transparent
China is the worlds largest energy regulation of Chinas insurance market
consumer using over 20% of world are expected to create significant
energy. Demand is expected to grow opportunities. Chinas rapidly growing
by 72% by 2030. middle-class and aging population is
creating a demand for life and non-life
The state-owned Big three of Sinopec insurance products.
Group, China National Offshore Oil Corp.
(CNOOC) and China National Petroleum Policy changes to RMB Qualified Foreign
Corp. (CNPC) have spent around USD Institutional Investors (RQFII) were
$200 billion on foreign acquisitions and introduced in March 2013. These have
joint ventures. loosened market entry requirements for
registered financial institutions and asset
managers with major operations in Hong
Kong.

Visit the Website and download the free Mobile App


Doing Business in China

There are opportunities for UK financial Opportunities for UK companies are


and professional service companies in: available in:

insuring Chinas huge, uninsured prevention and control of chronic


population diseases such as diabetes, cancer
developing insurance for weather- and asthma
related risks in China upgrading or replacing many of
asset management Chinas 22,000 hospitals
advising on corporate finance and facilitating the spread of digital health
protection of Intellectual Property (IP) technology to provide instant access
advising Chinese firms on resolution to health services and information
methods and working these into
contracts Contact anna.zhao@fco.gov.uk
advising Chinese companies on for more information on life sciences
how to present themselves to and healthcare opportunities in China.
potential investors Source: UKTI March 2015
providing restructuring advice to help
increase efficiency, list on the Stock
Exchange and engage in Mergers 10) MARINE SECTOR
and Acquisitions (M&A)
China is the worlds leading ship building
Contact anatole.pang@fco.gov.uk nation with 45% of all orders by gross
for more information on opportunities tonnage.
in Chinas financial services sector.
Source: UKTI March 2015 Its now looking to increase its capabilities
in higher margin, complex vessels opening
up opportunities for UK Small and Medium
9) LIFE SCIENCES & HEALTHCARE Enterprises (SMEs) to supply equipment
SECTOR and services. Chinas estimated spend
in the area would be about 9 billion
Access to healthcare has increased between 2015 and 2018.
following huge investment.
There are opportunities for UK
However, China still faces challenges companies in:
including:
marine systems and equipment
widening urban and rural disparity design
an ageing population ship operations
restricted resources ship yards
outdated technologies
Contact qiurong.zhang@fco.gov.uk
The NHS is a selling point in China. UK for more information on opportunities
capabilities in healthcare-related goods in Chinas marine sector.
and services provide an ideal match for Source: UKTI March 2015
Chinas national healthcare objectives.

www.China.DoingBusinessGuide.co.uk 75
CHINA
Doing Business in China

11) POWER GENERATION SECTOR 12) RENEWABLES SECTOR

China has very ambitious plans for China leads the world in renewable
domestic nuclear new build. International energy. It installed 20.7GW of wind
cooperation is not discouraged, but power in 2014, nearly half of the worlds
competing against Chinas lower cost- total. China has ambitious plans for
base makes this difficult. offshore wind, but has struggled to
implement them.
The National Energy Administrations
(NEA) target for nuclear installed capacity The UK signed a Memorandum of
in China is 58GW (gigawatts) by 2020, Understanding (MOU) on offshore wind
with a further 30GW planned. 26 nuclear cooperation with China in September
power reactors are under construction in 2013.
addition to the 22 already in operation.
Opportunities for UK companies include:
Chinese nuclear enterprises are looking
for established partners with whom they feasibility studies and modelling
can work with internationally. front-end engineering and design
environmental assessment and risk
UK companies should: management
offshore substations
establish long-term strategic marine cabling supply and installation
partnerships with Chinese enterprises installations and servicing
collaborate internationally in targeting consultancy and design
overseas markets (including the UK)
secure reciprocal opportunities in Contact patrik.li@fco.gov.uk
Chinas home market as part of this for more information on opportunities
arrangement in the renewables sector.
sell UK experience and expertise in Source: UKTI March 2015
waste management and
decommissioning

Contact patrik.li@fco.gov.uk
for more information on opportunities
in the power generation sector.
Source: UKTI March 2015

Visit the Website and download the free Mobile App


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Jaguar Land Rover in China
As a trustworthy, long-term partner and global brand, Jaguar Land Rover is deeply committed
to building a strong presence within local communities. In July 2010, Jaguar Land Rover
established a National Sales Company in China headquartered in Shanghai, in response to
the countrys rapid development. The company currently also has 3 regional offices in China,
located in Beijing, Guangzhou and Chengdu.

Jaguar Land Rover is also dedicated to development process that combines employee
consolidating its existing facilities in China, training and growth, whilst encouraging a work-
which include 3 Training Academies in Beijing, life balance. The companys current employee
Shanghai and Guangzhou. Its infrastructure base in the country has increased to over 400,
includes 3 import locations at ports in Tianjin, more than 90% of whom are Chinese. Its also
Sh a n g h a i a n d Gu a n g zh o u , a n d 5 p a rts a young, innovative team, with 85% of its
distribution centres in Beijing, Guangzhou, employees in China under 40 years old.
Chongqing and Suzhou.
To get closer to customers, Jaguar Land Rover
To offer customers a deeper brand experience is relentlessly enhancing service quality by
and understanding of its products, it has expanding its dealership network across China;
developed 3 Land Rover Experience Centres by the end of 2014, Jaguar Land Rover China
in Beijing, Guangzhou and Huzhou. And had appointed 248 authorised dealers, 179 of
construction on the fourth Experience Centre in which were already in operation, covering more
Chengdu is currently underway. Looking than 100 cities across the country.
forward, Jaguar Land Rover will establish a total
of 7 Land Rover Experience Centres in China. Jaguar Land Rover works together with its
dealers to ensure that all customers experience
Jaguar Land Rover places great importance on an all-round brand experience that they have
its employees and has a comprehensive staff come to expect from such a distinguished
development programme comprised of an marque.
e xcellent performance appraisal and talent
Since establishing its National Sales Company Manufacturing Localisation
in China, Jaguar Land Rover has witnessed To better meet the demands of Chinese
healthy and steady growth. China has become consumers, Jaguar Land Rover established a
Jaguar Land Rovers single largest market joint venture company with Chery Automobile
worldwide, and sales have tripled since 2010. Company Ltd. After receiving formal approval
The company has also maintained double-digit from the Chinese government on November 18,
growth throughout the year thus far. 2012, Jaguar Land Rover and Chery formally
laid the foundation stone for a new manufactur-
Customer First Philosophy ing facility in China. Jaguar Land Rover and
Jaguar Land Rover has a strong Customer Chery have jointly invested RMB 10.9 billion, to
First business philosophy, which regards build a manufacturing facility located at the
customers as an integral part of the way it does Changshu Economic Development Zone. The
business. With the Tailored for China strategy, investment will also include the construction of
it is dedicated to providing Chinese customers an engine production facility and a R&D centre.
with the most advanced products, taking their
demands and preferences as an essential Chery Jaguar Land Rover Changshu plant has
consideration in global product research and been opened on 21st October, which is almost
design. To support the strategy, the company 400,000 square-metres in size. The first model
has an engineering team based in Shanghai that built in this plant was the Range Rover Evoque,
is dedicated to researching and analysing the and the first locally produced Jaguar Land Rover
trends and preferences of Chinese consumers, car has rolled off the production line at the
helping to give the China market a voice in opening ceremony. By 2016, the Changshu
Jaguar Land Rover global product development plant is predicted to build three Jaguar Land
and engineering processes, and incorporating Rover models. Initial annual production capacity
the Chinese markets needs in the design and of the plant will be 130,000 units a year, and we
development of its global products. are aiming for the facility to be the most
sustainable and efficient car factory in China.
At the core of Jaguar Land Rover Chinas For Jaguar Land Rover, this world-class facility
customer service philosophy is a relentless is an important milestone, demonstrating our
desire to raise customer satisfaction. commitment to bringing more locally-produced
vehicles to Chinese customers.
It endeavours to maintain the same quality
service standards consistent with all Jaguar Corporate Social Responsibility
Land Rover operations worldwide. Meanwhile,
its dealerships are equipped with advanced JLR CSR Strategy in China
hardware and world-class training at Training Besides providing customers with world-leading
Academies, helping to ensure that each Jaguar products and services in the China market, CSR
Land Rover dealer offers top-notch maintenance is also one of JLR corporate strategic pillars,
services. The company launched a new Three which is aligned with JLR global CSR strategy.
Guarantees programme in September 2013, For Chinese children and youth are the future of
going beyond requirements of the government the country, focusing on the development and
regulation, to increase customer satisfaction and wellbeing of the next generation is key to the
loyalty in China. sustainable development of China, there-
fore JLR has focused our CSR programmes
Jaguar Land Rover also initiates 360-degree particularly on youth in China.
staff competitions for service advisors,
technicians, and parts technicians all of which
help guarantee high quality customer service.
With the goal of inspiring the dreams of our
future, the Jaguar Land Rover China Children &
Youth Dream Fund, jointly initiated by Jaguar
Land Rover China (JLR China) and the China
Soong Ching Ling Foundation (CSCLF),
was officially launched on 28th May, 2014 at the
Great Hall of the People in Beijing. Through the
fund, Jaguar Land Rover China will support the
growth and development of children and youth
in four areas, namely Sports for All, Road Safety,
Children & Youth Development, and Social
Care. Funded by a donation of RMB 50 million
over three years, programmes under these
pillars will be dedicated to creating healthy living
and educational environments for the next The first journey was to Yunnan, where JLR
generation, helping them realise their dreams. offered eye screening for more than 30,000
students, and has been providing corrective
2014 CSR Programmes in China surgery and treatment for 600 students, eye-
glasses for 3,000 children in need, as well as
Jaguar China Youth Football Development local doctor trainings and equipment donation to
Initiative 4 local hospitals.
The Jaguar Football Public Open Day is an
important part of The Jaguar China Youth Foot- Disaster Relief Efforts
ball Development Initiative, and the first Following a magnitude 7.0 earthquake that
programme launched after the Dream Fund rocked Ya'an in Sichuan province on 20th April
establishment. The Jaguar Football public open 2013, Jaguar Land Rover China immediately
day has launched in Shanghai on 14th July, and donated RMB 3 million to support disaster relief
in Beijing On 25th October. It aims to provide the and restoration. Alongside its dealer partner
public with free access to football fields in Shanxi Shunchi Lujie Automobile Sales Co., Ltd,
Beijing, Shanghai, Guangzhou and Chengdu, to it donated RMB 4 million to the quake-affected
encourage their participation in the sport. The area in Yaan to rebuild schools in the region and
S i n o -U K fo o tb a l l a n d cu l tu re e xch a n g e help local students return to their studies
p ro gramme also sent a group of 56 students to and regain a normal life. On 27th August 2014,
th e U K fo r fo o tb a l l tra i n i n g a n d cu l tu ra l Jaguar Land Rover revisited their Yaan Hope
e x change, where theyve shared skills and School and undertook teaching activities with
experience with British youth, and also have had classes of the schools students.
the opportunity to interact with David Beckham,
brand ambassador of Jaguar. On 5th August, 2014, Jaguar Land Rover China
announced that it will be immediately donating
Land Rover Never Stop Caring RMB 5 million to support the post-disaster relief
Journey for Vision Programme effort to assist residents of the Zhaotong region
As an extension of Land Rover Never Stop of Yunnan province who were struck by earth-
Discovering campaign, Land Rover Never Stop quake on 3 rd August. Bob Grace, Regional
Caring programme will offer free screening and President of JLR Greater China, said that JLR
medical treatment to children with eye impair- in China stands shoulder to shoulder with
ment in remote areas in China. As well as the affected people of Yunnan and supports the
providing screening, trainings and equipment work of all those working to restore the area
donations will be offered to local hospitals. back to normal.
HIGH-vALUE OppORTUNITIES IN MAINLAND CHINA
CHINA

While the rise of China is easy to acknowledge,


businesses constantly need to catch up with the
speed and depth of change and development
in Chinas large and complex market space.
Whether selling, trading, investing or
franchising, China offers opportunities
in abundance to UK companies, large
or small.

www.China.DoingBusinessGuide.co.uk 81
CHINA
Doing Business in China

High-value opportunities in researching and validating projects,


mainland China saving you time and resources

How the service works


The high-value opportunities
(HVO) programme Global High Value Opportunities are worth
trillions of pounds in total and cover a
UKTIs High Value Opportunities broad range of markets and sectors. Each
programme is focusing on a number of project has contracts with a total value of
priority areas in key sectors in mainland at least 500 million. At least 250 million
China, including healthcare, transportation, of this will be available for UK competition.
energy and sustainable urban develop-
ment. These areas present significant Through the programme, UK Trade and
opportunities for UK companies in China, Investment (UKTI) can:
and are linked closely to the priorities in
the five-year plan. The programme aims share information with you on major
to identify a pipeline of major projects in projects and contracts
each of these areas and provide targeted
support that will help UK companies give your company access to a
identify opportunities and win business. network of expert advisers in the UK
and overseas that provide long term
See: www.gov.uk/high-value- support
opportunities
help your company build relationships
Overview with stakeholders e.g. private sector
business specialists and other
The High Value Opportunities programme government departments in the UK
helps UK businesses access large scale and overseas
overseas procurement projects. It identifies
opportunities as they become available put your company in touch with other
and helps businesses secure contracts. likely business partners to bid for
projects
Benefits
offer lobbying support if needed
The service can benefit your business by:
Eligibility
providing information and support on
around 100 major projects, and a The service is open to any size of
clear route to win business from them business registered in the UK, in any
sector, and with any level of export
letting you know about projects at experience.
an early stage, giving you a
competitive advantage

Visit the Website and download the free Mobile App


How to apply

Contact your International Trade Team at:


www.uktiofficefinder.ukti.gov.uk/
contactSearch.html.

A member of the team will be in touch


within five working days to discuss your
needs and the service options which are
best suited to you. These will vary a
ccording to your export experience.

Further information

General enquiries should be sent to the


High Value Opportunities programme
team by
contactinghvopteam@ukti.gsi.gov.uk

Source: UKTI April 2015

www.China.DoingBusinessGuide.co.uk 83
Doing Business in China
The pace of economic and currency liberalisation is picking up in China.
According to Barclays it is time to unleash the dragon and debunk some
of the myths about doing business in the worlds largest consumer market.

With a population of approximately 1.4 Corporates incorporated outside


billion people and a growing consumer of China can also hedge their future
and middle class, China is a beacon expected cash flows using the forward
of opportunity for UK importers and market and should speak to a member
exporters looking to expand globally. of their banks FX relationship team
to discuss the various approaches
However, entering a market as vast as available.
China for the first time can be daunting,
particularly for UK companies with little As more Chinese companies are
experience of trading in overseas encouraged to use RMB to trade
markets, or outside of a Western internationally, UK importers and
focused culture. Restrictions on the free exporters are likely to start using letters
movement of the Chinese currency, the of credit (L/Cs) denominated in RMB.
renminbi (RMB), may have also created L/Cs are commonly used in China not
uncertainty among companies about only to mitigate credit risk but also to
how best to pay for goods and services enable Chinese suppliers to obtain
they sell to or import from China. credit, which may enable UK buyers
to negotiate more favourable payment
The Barclays China Global Corporates terms.
team in Hong Kong supported by
China client teams based in London
notes the liberalisation of the Chinese
market, and how trading in RMB has It is vitally important for
picked up in recent years; China is very
much open for business. businesses to understand
the link between the physical
Understanding and trading Chinas
currency and nancial supply chains
when dealing in new and
US dollars may still be the currency
of choice for UK clients doing business distant markets.
in China, but it is time to demystify the
RMB. Barclays encourages UK Eric Balish, Trade & Working Capital,
companies to consider trading in RMB Barclays
as it means that they can both make
payments to and receive payments
from their Chinese business partners.
Whether buying or selling, using L/Cs
presents the opportunity to negotiate UK exports to China grew
extended payment terms with the
underlying comfort of a bank undertaking
by a compound annual
to pay the seller. UK exporters offering growth rate of 17% from
credit terms become even more attractive
business partners. Banks can finance
2006 to 2013.
these transactions when the goods are
shipped providing a positive cash flow HM Revenue & Customs
impact for the exporter. Importers can
mitigate transaction risk and enjoy an
extended period of credit as opposed to Working with UK Export Finance
paying, for example, 30% up front some
time in advance of shipment and 70% Barclays is increasingly seeing small
upon shipment. It is vitally important for and mid-size companies seeking to grow
businesses to understand the link between their business in China. To help smooth
the physical and financial supply chains the path for UK exporters, Barclays has
when dealing in new and distant markets. a dedicated team that works very closely
with the export credit agencies, including
Discounts for RMB trade UK Export Finance (UKEF). UKEF
provides a number of flexible products
Chinese businesses that export or to support British exporters (or initiatives
import can both receive and make with a significant British content) to
payments in RMB UK companies China and around the world, including
should ask Chinese buyers and suppliers working capital and bond support
whether they can invoice or make schemes.
payments in RMB as here too there may
be a discount or price benefit available. For those looking to do business in
China and other markets, a range of
It may be more cost effective to pay support services are available that they
in RMB, given that a Chinese supplier can draw on. In short, the opportunities
receiving foreign currency may increase are there, and so are the financial tools
the cost of goods to cover their exchange required. By discussing these new
risk. Barclays can support businesses markets with their bank, businesses
in sending RMB payments clients with can make markets such as China work
payables and receivables in RMB can for them.
open a RMB account which could help
in reducing foreign exchange costs. For more about how Barclays can
support growing businesses visit
www.barclays.com/corporatebanking
or call 0800 015 4242*

*Lines are open Monday to Friday, 8am to 6pm. To maintain a quality service we may monitor or record phone calls.
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CHINA

The UK is cooperating closely with the Chinese


authorities on the development of Free Trade Zones
(FTZs) in Shanghai, Fujian, Tianjin and Guangzhou.
The new pilot Shanghai FTZ has the potential to
change the way UK companies operate in China.
FREE TRADE zONES

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Doing Business in China

Free trade zones Guangdong Free Trade Zone

The UK is cooperating closely with the Taking advantage of the Mainland-Hong


Chinese authorities on the development Kong Closer Economic Partnership
of Free Trade Zones (FTZs) in Shanghai, Arrangement (CEPA) to drive the
Fujian, Tianjin and Guangzhou. The new liberalisation of trade in services, the
pilot Shanghai FTZ has the potential to Guangdong park aims to integrate the
change the way UK companies operate economies of the Pearl River Delta
in China. (Guangdong, Hong Kong and Macau).

The financial services sector has already


Tianjin Free Trade Zone seen much change here and future reform
is likely to be heavily service-focused. We
Finance-related innovation in this northern recommend that companies in financial,
marine hub is likely to focus on financial legal and professional services, trading,
leasing, but there will also be an emphasis logistics and marine transportation
on high-end manufacturing and the monitor developments here.
regional integration of Tianjin, Beijing and
Hebei. It is recommended that members Background
in marine transportation (in particular, The Guangdong park is expected to
cruise liners and yachts), logistics, strengthen economic bonds between the
trading, finance, advanced manufacturing mainland, Hong Kong and Macao, with a
and legal and professional services keep focus on liberalising the trade of services
a close eye on future announcements between these separately administered
here. regions. New regulatory systems will be
explored, including revising the Customs
Background supervision system and providing more
The Tianjin park contains three areas: favourable opportunities to Hong Kong
Binhai New Area Central Business companies under CEPA.
District, Dongjiang Bonded Port Zone
and Tianjin Port Bonded Zone (including It will consist of three zones: Guangzhou
the Airport Economic Zone). At 260 sq Nansha, Shenzhen Qianhai Shekou and
km, it is currently nine times the size of Zhuhai Hengqin New District.
the Shanghai zone.
The Qianhai Zone as it exists currently is
Dongjiang Bonded Port Zone stands out. already geared towards Hong Kong with
Ship registration, marine finance and a focus on the professional and financial
financial leasing, among others, have services sector. According to Qianhai
been encouraged and are developing Management Bureau, as of 30th November
well. The municipal government has also 2014, of the 17,778 companies registered
lent its backing to legal and professional in the Qianhai Zone, roughly 57% were
services. financial enterprises, including 21 banks
and 16 insurance institutions.

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Qianhai has had 40 pilot financial Fujian Free Trade Zone
measures approved by the central
government, some of which have been Building on the Economic Cooperation
implemented already. By the end of Framework Agreement (ECFA) signed
November 2014, one of the most high- in 2010, the Fujian park aims to develop
profile and important of these, registered trade links with Taiwan and in so doing
cross-border RMB loans, had reached increase exports to and imports from
RMB 73.8 billion. Furthermore, the further afield. We recommend that
Qualified Foreign Limited Partner (QFLP) members in trading and logistics or
and Qualified Domestic Limited Partner marine transportation pay attention to
(QDLP) pilot programmes in Qianhai have developments in this park.
created new channels for two-way capital
movement. The State Council has already Background
approved a policy to allow Chinese The Fujian FTP consists of bonded
companies in Qianhai to issue RMB zone/port areas in Xiamen, a bonded
bonds, known as dim sum bonds, in zone/port/economic zone in Fuzhou
Hong Kong. and an experimental zone in Pingtan.

Qianhai is the only place on the mainland Enjoying a geographical advantage, the
connected to Macau by bridge, and it Fujian FTP is designed to strengthen the
can be expected to continue to foster economic relationship between the main-
economic links with the island. Nansha land and Taiwan following the signing of
has an existing development zone, and the Economic Cooperation Framework
the local government has a stated Agreement (ECFA) in 2010. Although the
ambition to attract more investment Taiwan administration has faced some
in manufacturing, trading, education, internal issues with the 2013 Cross-Strait
logistics and tourism. Service Trade Agreement, the original
ECFA has in fact generated a substantial
On 18th December 2014, a new agree- amount of cross-straits trade, a reflection
ment was signed under CEPA for the of the privileged status of Taiwanese on
liberalisation of trade services between the mainland.
Guangdong and Hong Kong, which was
due to come into force on 1st March Pilot programmes will focus on outbound
2015. Guangdong will open 153 sub- investment to Taiwan in trading, aero-
sectors 95.6% of its trade services space, finance, tourism and agriculture.
to Hong Kong. A negative list has been Moreover, new policies are expected with
introduced in the agreement to make it a view to the building of a key port on the
more open than CEPA. Maritime Silk Route, which would facilitate
trade and services with other ASEAN
countries

Source: CBBC Dec 2014

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The following information in this section is The Waigaoqiao Free Trade Zone is
highlights from the CBBC report: China about 25 km from Shanghais CBD.
(Shanghai) Pilot Free Trade Zone. From Waigaoqiao Free Trade Zone
it takes about 45 minutes to drive to
A copy of the full report can be Pudong Airport, whereas Yangshan Free
downloaded from the CBBC website at: Trade Port Areas is about 90 minutes
www.cbbc.org away.

Note: The site of the FTZ at Waigaoqiao


Shanghai Pilot Free Trade Zone was previously referred to as a
BaoShuiQu in Mandarin, meaning a
Located in the Pudong New Area of bonded zone. Confusingly, however, this
Shanghai, the FTZ is Chinas first free BaoShuiQu was previously sometimes
trade zone. After being approved by the translated into English as a Free Trade
State Council in August 2013, the FTZ Zone. The Shanghai (China) Pilot FTZ
was officially launched on 29th is new and unique.
September 2013.
According to statistics issued by the FTZ
Replacing the traditional low-cost land Management Committee, there were a
policy of traditional industrial parks, the total of 18,828 companies registered
FTZ differs through not being designed to within its perimeters as of June 2014,
give preferential treatment to companies amongst which 10,445 were registered
operating inside the zone. The FTZs after the establishment of the FTZ. There
focus is instead on implementing pilot are also 31 registered banks, including
policies for exploring new systems of Citi Bank, HSBC, Standard Chartered,
governance alongside an opportunity Bank of China, Hang Seng Bank and
to modernise existing administrative Deutsche Bank.
mechanisms. The FTZ will provide a
blueprint for further reform throughout By June 2014 there were 1,245 foreign
China. The FTZ currently covers a total companies registered in the FTZ, nearly
area of 28.78 sq km. nine times more than a year before.

It comprises four zones supervised


by China Customs: Key highlights of new policies

Waigaoqiao Free Trade Zone The stated direction for new policies in
Waigaoqiao Bonded Logistics Park the FTZ can generally be grouped into
Yangshan Free Trade Port Area four categories:
Pudong Airport Free Trade Zone
i. Expanding the finance sector

Free convertibility for RMB for capital


accounts will be reviewed

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Liberalisation of interest rates Classified supervision, and establish-
ment of demonstration and trading
Permits for qualified foreign banks platforms for bonded goods
and private capital groups to set up
wholly-owned subsidiaries or joint Optimising efficiency of customs
venture banks inspection, immigration and
quarantine processes, together with
Centralised management for foreign improved port management and more
exchange funds; permission for efficient risk control and supervision
foreign enterprises to participate in measures
future commodity trading; support for
host equity trading institutions to iv. Creation of a competitive regulatory
establish an integrated financial and tax environment
service platform
A key feature is to support innovative
Encouraging the development of business models rather than providing
shipping finance and the freight index reduced tax rates or universal incentives
derivatives to all sectors, which are commonplace
in special development zones in China.
Gradually granting licences for new
cross-border financial products Under the Framework Plan, financial
leasing companies in the FTZ are
ii. Simplifying administration processes granted an exports value-added tax
and expanding market access (VAT) refund a policy only currently
applicable to the domestic companies
The Negative List has clarified the in the Tianjin Binhai New Area
administration and business scope
of foreign invested enterprises. The Investors injecting capital in the form
Negative List is reviewed on an annual of non-monetary assets into their
basis and each iteration is expected to affiliates in the FTZ may amortise
feature an expanded number of sectors their asset appreciation premium over
allowed to have operations within the FTZ. a period of five years for corporate
income tax (CIT) and individual
The intentions are: income tax (IIT) purposes

Simplified procedures for incorporating Professionals in high demand may


foreign invested enterprises enjoy preferential IIT treatment with
respect to gains derived from share-
Simplified approval for outbound based payments a policy currently
investments only available in the special zone of
Zhongguancun in Beijing
Permission for overseas portfolio
companies and master funds
establishments to invest overseas

iii. Upgrading of customs supervision


framework

Overseas shipments into the FTZ


without customs clearance, until
goods are sold to outside the FTZ

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sale and distribute products such as


Highlighted New Opportunities: grain, vegetable oil and sugar, without
a restriction on the number of outlets.
Online retailers can warehouse
inventory customs-free in FTZ bonded iii. Manufacturing & sales of gaming
warehouses, reducing costs and consoles
mitigating risk
Foreign investors are permitted to
Overseas suppliers can utilise online register a company inside of the FTZ
trading platforms such as Kua Jing to operate manufacturing and sales of
Tong to sell their commodities directly gaming consoles to the Chinese market,
to Chinese consumers without/before (with approval of gaming content).
setting up commercial presence in
China
Trading platforms & services
The DIG (direct imported goods)
Market is an alternative option for i. Trade facilitating platforms
overseas suppliers wanting to
circumvent agency fees Currently there are two models for mail
order services in China:
Overseas alcoholic beverage producers
and retailers can take advantage of The first is a direct mail model. With
new exhibition and trading centres to this model, all products ordered online
explore the Chinese market will be delivered directly from over-
seas suppliers. There is typically a 7
to 10 day lead time.
Investment in retail & wholesale
The second is the FTZ model. With
i. Mail order & online shopping this model, products are stored in the
FTZ with a bonded status and
Foreign invested companies will be delivered to customers from the FTZ
allowed to operate mail order and online after they order. Lead times are much
retail services with direct mail delivery shorter than with the direct mail model
from overseas, without the need for as a result. The FTZ model is
warehousing in China, while restrictions expected to be increasingly prevalent
will remain outside the FTZ. The changes with time.
appear to allow large mail order retailers
from abroad to set up businesses One trade facilitating platform which is
independently in China. already proving popular is Kua Jing Tong.
It is a good online business platform for
ii. Food retail, wholesale & distribution UK food and beverage companies to test
their products in the Chinese market at
Inside the FTZ, foreign invested reduced risk, before establishing a more
companies are allowed to retail, whole- independent commercial presence in China.

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Direct Mail Model: Kua Jing Tong Kua Jing Tong is planning to add the
FTZ model to their current business
Kua Jing Tong is an authorised cross- processes. Benefits will include improved
border online business platform. Some efficiency of after-sales services, because
key features of Kua Jing Tong are as all products can be returned or changed
below: domestically without shipping back to the
port of origin.
Price and customs duty are clearly
indicated to customers on Kua Jing
Tongs website, and is displayed Direct Mail Model: Amazon
separately for customers reference.
On 20th August 2014, Amazon signed a
Products are usually sold at a lower Memorandum of Understanding with the
price, as most imported products FTZ authorities, announcing a move to
bought into the FTZ are subject to a provide a cross border e-commerce
blended tariff rate called tariff for platform, allow greater access to Chinese
personal articles rather than normal customers. Amazon says that Chinese
import tariffs imposed on goods customers will be able to buy the products
imported into non-FTZ parts of China at the same price as those on Amazons
under regular trade tariffs (e.g. MFN overseas websites, with only the addition
rates) and luxury excise duty (where of logistics and customs duties for
applicable) - there are four grades of personal articles.
blended tariffs 10%, 20%, 30% and
50%; most food is subject to the 10% From June to August 2014, Amazon
rate while most alcoholic spirits are imported around 1,000 shipments in order
subject to the 50% rate. to trial the direct mail model. Amazon
also plans to set up its own logistics
Kua Jing Tong also ensures goods warehouse inside the FTZ.
speedy delivery and ease of payment
via its online service, as all products Amazon says that once up and running,
are bonded in the FTZ and pass cus an FTZ model could be also be
toms clearance upon order. established, allowing Amazon to compete
in with third party e-commerce platforms
More than 20 suppliers and online such as Tmall.
business operators have already
registered with Kua Jing Tong. These
include Hyundai department store (the
second largest online business operator
in Korea), New Tao, Janesce and
Sunland. According to the Management
Committee of the FTZ, by the end of 2014
30 online operators are expected to
cooperate with Kua Jing Tong, big players
such as including Walmart.

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Doing Business in China

ii. Waigaoqiao Directly Imported Goods regarding importation of vehicles under


Market (DIG Market) the DIG system. If approved, this is a
potential development which would
The DIG Market in the FTZ has already provide addition opportunities for UK
attracted enormous interest from businesses in the automotive sector.
Shanghai residents keen to buy imported
goods. Its frozen seafood, meat and fresh iii. Shenlan Bonded Exhibition Centre
fruit, directly imported from overseas, are
very popular because of their perceived Another highlight of the FTZ is the
high quality and relatively low prices Shenlan bonded exhibition centre
compared with other imported produce. adjacent to the zone, which has been
Goods displayed in the DIG Market are awarded special approval from Shanghai
already duty paid on display. government. Imported products at
Shenlan are considered to have a bonded
The DIG Market claims to have about status for exhibition and sales purposes.
5,000 stock keeping units (SKUs) and it The link between bonded storage inside
is expected to increase to 10,000 SKUs of the FTZ and physical stores in
in the near future. About 70% of products Shenlan next to the FTZ provides
are food and beverages, and all products flexibility of storage, exhibition and sales
are from overseas. opportunities for suppliers.

The DIG Market adopts a membership China Customs conduct pre-pricing


system, but without a membership fee. review and electronic supervision, and
Products from overseas suppliers can the China Inspection & Quarantine
be stocked in the DIG Market by signing Bureau (CIQ) conduct pre-inspection on
a service contract with the operator. the imported products which facilitates
Several other DIG style markets will open their entry into the FTZ.
soon outside the FTZ in other parts of
China. In the future, DIG markets are At the time products are sold, payment
expected to be rolled out to nationwide will automatically be split into two parts,
hubs and act as delivery distribution the first payment for the products, and
sites for online business and small-scale the second payment for the products
wholesale operations. customs duty which goes directly to a
China Customs bank account. If imported
By cutting out distributors between over- products cannot achieve sales targets
seas suppliers and end customers over- after exhibition in Shenlan, unsold
seas suppliers, will enjoy enhanced price products can be returned into the FTZ
competitively or profit margins in a new within three months for re-export or
sales channel. stored in the zone until appropriate sales
channels can be found.
In August 2014, the FTZ Management
Committee submitted a pilot plan for According to the FTZ Management
Ministry of Commerces approval Committee, more similar bonded

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exhibition and trade areas similar to platforms for trade and exhibition in the
Shenlan are expected to be established FTZ. For more information, please refer
in the future. to the Shanghai Waigaoqiao Imported
Goods Network official website:
Bonded exhibition ensures the flexible www.ftztrading.com
distribution of products without duty
payments and can offer a reduction in
cost for importers. British SMEs, who Professional services
have yet to enter the Chinese market,
can benefit from the opportunity these
platforms present to test local demand Highlighted New Opportunities:
for imported products.
New opportunities to set up joint
iv. Waigaoqiao International Exhibition ventures with controlling share (up to
& Trading Center of Wine & Beverage 70%) in human resources agencies
(IWC)
Joint ventures to service outbound
IWC is currently the biggest exchange tourism allowed for the first time
platform for imported wine in China.
The IWC allows business to exhibit and
promote imported beverages and allows i. HR services
a facility to explore local reception to new
products. Consignment services and The permitted JV shareholding of foreign
distributor search services can be investors has been lifted from 49% as it
provided as well as Customs/CIQ is outside the FTZ, to permit a controlling
services. stake up to 70%; and the requirement for
registered capital has been reduced from
The high cost of entering the Chinese USD $300,000 to USD $125,000.
market due to the need for regional
specific marketing, promotion and It is estimated by the Ministry of
advertising has dissuaded some SMEs Commerce that the human resource
from setting up in China. The IWC services sector, such as online recruit-
provides an opportunity to display ment, professional outsourcing, and HR
products and develop a regional network management consulting services will
at a reduced cost. be worth billions of RMB in 5 to 10 years,
making this an exciting development
IWC provides regular promotions and for foreign HR service providers.
events, such as product launches, wine
tasting events and presentations on Note that Joint Ventures (JVs) in this
import procedures. Some special report refer to both Equity JVs and
exhibition areas have been formed for Cooperative JVs. Unless stated other-
countries such as France, Portugal and wise, it is implied that a Chinese party
Chile. is required to own the controlling stake
in a JV. Joint Ventures are interpreted
Other imported beverages found at the throughout as a venture between one
IWC include Japanese sake and Mexican foreign party and one Chinese party.
tequila.

Other products such as cosmetics,


machine tools/engineering machinery,
automobiles, pharmaceuticals/medical
devices have separate professional

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Doing Business in China

ii. Travel services However, it remains difficult to see if and


how foreign invested companies will be
The FTZ allows foreign investment in permitted to operate even as joint venture
outbound tourism with the exception of partners, or how they could operate a
travel to Taiwan. This contrasts to foreign business purely within the confines of the
investment outside the FTZ which is FTZ. Over time as case studies emerge,
restricted to inbound tourism activities. we will obtain greater clarity about how
these new regulations will be work in
iii. Legal services practice.

Chinese law firms and foreign counter-


parts are encouraged to explore the FTZs i. Rail transportation
mechanisms that allow closer business
cooperation, such as foreign law firms While cargo transportation has legally
working with Chinese counterparts to opened up to wholly foreignowned
signing agreements and holding joint investment, passenger transport
consultations. However, it is also high- companies remain restricted to JVs, with
lighted in the 2014 Negative List that Chinese partners as controlling share-
foreign companies wishing to provide holders.
legal services can only operate by setting
up representative offices within the FTZ. ii. Road transportation

Investment in the operations of passenger


Transportation & logistics coach/bus terminal stations are allowed in
the FTZ, although limited to joint ventures
with foreign ownership not exceeding 49%.
Highlighted New Opportunities:
iii. Waterways and ocean freight
New and immediate opportunities for
public international ship agencies Foreign parties will be able to own a
and air freight transportation sales controlling share in Public international
agent businesses ship agencies for the first time via the
FTZ, but not other types of ship agencies.
Danish conglomerate Maersk Line However, some ambiguity regarding
has already set up a subsidiary within definitions and interpretation remain at
the FTZ to take advantage of the this stage.
opportunity to establish a public
international ship agency WFOE There are also new opportunities to open
wholly foreign-owned enterprises in
It should be noted that the legal barriers subsectors such as cargo loading and
to operating in transport and logistics are also marine transportation.
theoretically relaxed in the FTZ.
While investment in international ocean
shipping operations has been liberalised

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in certain cases, investment in domestic institutions or enterprises to borrow
waterway operations remains restricted RMB from overseas, provided the
to joint ventures, with Chinese partners funds are used for projects within the
as controlling shareholders. FTZ and overseas

iv. Air freight transportation Two-way cross-border RMB pooling,


centralised collection and payment,
Air freight operations have opened up allowing MNCs in the FTZ to
to wholly-foreign owned investments, concentrate their liquidity and provide
but other areas such as general airline two-way payment services for cross-
operators remain highly restricted. border RMB current account items
between their domestic and overseas
affiliates
Financial services
Cross-border RMB current account
concentrated payments/receipts, to
Highlighted New Opportunities: reduce the number of deals and
cross-border payments, and assist
Opportunities for banks to create new enterprises to decrease foreign
financial products around the FTZs exchange risk
two-way cross-border RMB pooling
and centralised collection and RMB settlement for cross-border
payment functions e-commerce via authorised
institutions registered in Shanghai or
Qualified accountancy firms will have branches registered in the FTZ
opportunities to set up branches as
qualified partnerships and limited Interest rate liberalisation market-
liability partnerships inside the FTZ for based interest rates for foreign
the first time. They will also not be currency deposits with a ceiling of
subject to the restriction of having no USD $3 million. Interest rates for
more than one branch in a single city, deposits exceeding USD $3 million
as is the case outside the FTZ would be subject to negotiation
between the financial institutions and
their customers
Financial reform and liberalisation is one
of the most salient features of the FTZ. In
December 2013, the Peoples Bank of
China announced a financial guideline
Opinions for the FTZ, followed by some
detailed suggested rules and regulations
for its implementation.

These include:

Companies and individuals working


in the FTZ can open Free Trade
Accounts, which are treated similarly
to bank accounts outside China

Cross-border RMB borrowing


liberalised, allowing financial

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Doing Business in China

By the end of June 2014, a large number Limited Liability Partnerships will be
of foreign and domestic financial allowed for companies with more than
institutions had already set up their one year experience, and stable
commercial presence in the FTZ. Data operations
from the FTZ Management Committee
shows that there were already 1,859 ii. Wholly foreign-owned banks
Asset Management Companies, 436
Financial Leasing Companies and Special In the FTZ, foreign financial institutions
Purpose Vehicles, 113 Equity Investment are permitted to establish wholly foreign-
Companies, and 70 Licensed Financial owned banks, or joint ventures with
Institutions. qualified private capital.

By the end of June 2014 there were 31 iii. Restricted licence banks
domestic or foreign banks operating in the
FTZ, including foreign institutions HSBC, Restricted licence banks (banks working
Standard Chartered, Citi Bank, DBS, ANZ primarily in wholesale banking) are to
and Deutsche Bank. be allowed in the FTZ on a trial basis.
Detailed implementation rules and
For additional financial innovation case regulations are currently awaiting release,
studies, please refer to the FTZ website: after which we will know more about how
www.china-shftz.gov.cn/jrcx_index.aspx to substantiate this opportunity.

i. Accounting services iv. Offshore businesses

Outside the FTZ there are a number Qualified Chinese banks in the FTZ are
of restrictions on accountancy firms, allowed to open a Free Trade Account for
including firms being prohibited from financing, investment and other cross-
opening up branches in the city where border transactions separated from
their headquarters are located, and onshore transactions.
from opening more than one branch
in a single city. v. Financial leasing companies

For the FTZ however, the Ministry of Financial leasing companies are allowed
Finance announced that the following to provide a wider range of services and
types of accounting firms will be allowed better utilise offshore funds to establish
to establish branch offices in the FTZ SPVs for carrying out single-ship and
and use Shanghai PFTZ in their branch single-aircraft leasing businesses.
office names.

Qualified Partnerships will be allowed


for companies with stable operations

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Medical institutions & insurance Whilst it is promising to see liberalisation
of Chinas medical insurance industry,
Medical Institutions there are still a number of practical issues
obstructing future foreign investment.
One significant issue is that national
Highlighted New Opportunities: legislation, which remains in the FTZ,
limiting foreign doctors to 12 months work
Foreign investors can set up a wholly in China. Another is the restriction on the
foreign-owned hospitals within the FTZ, import of medical devices - specifically
expanding scope to provide high-end high-tech equipment classed as Category
medical services to Chinas growing I items which require approval from
middle-income and wealthy residents Chinas central government.

In September 2014, Shanghai Life


Restrictions will be lifted on the minimum Insurance Company received official
total investment and operating terms for approval to set up in the FTZ becoming
medical businesses. This allows the its first legal insurance company entity.
establishment of wholly foreign-owned Although this was a Chinese insurance
medical clinics or hospitals. company, foreign invested insurance
institutions are currently allowed to enter
In July 2014, the FTZ signed agreement into China via joint ventures, and we
with Artemed Group, a German medical expect substantial policy revisions to be
and health care provider, to become the announced regarding their operation in
first wholly foreign-owned medical the FTZ in the future.
institution in mainland China.

Medical Insurance Providers Telecommunications

Highlighted New Opportunities: Highlighted New Opportunities:

Foreign invested medical insurance New specific opportunities to provide


institutions are already allowed in the online data processing and
FTZ, however detailed implementation transaction processing services
rules and regulations are currently
awaiting release as the current Other areas worth exploring include
regulations remain ambiguous information services such as app
stores, data storage and forwarding
The good news, regardless, is that services, call centres services and
foreign-owned hospitals will be VPN services
permitted to open more clinics, a
growth in the private medical industry China Telecom, China Mobile and
will provide an additional opportunity China Unicom have all set up
for medical insurance providers to subsidiaries in the FTZ to take
expand their business advantage of the new opportunities.

According to the FTZ authorities, more


than 20 international high-end medical
institutions are already in talks with the
Chinese government, with the intention
of entering into Chinas healthcare market
soon.
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CHINA
Doing Business in China

These opportunities are also available Engagement and participation in


to foreign investors and CBBC have online gaming operational services
knowledge of foreign MNCs which are
already in detailed discussions with the Internet data centre operations
FTZ Management Committee.

Foreign companies in the Creative industries


telecommunication sector in the FTZ must
fulfil qualification requirements including: Design Services:

All secured operational capital and i. Marine design (luxury cruise ships
professionals must be appropriate to & yachts)
the scale of their business
Foreign investors are allowed to establish
The minimum registered capital is wholly foreign-owned companies in the
RMB 1 million FTZ, in contrast to elsewhere in China
where they can only operate as joint
Foreign companies must have ventures. Finnish ship design company
secured business premises, ALMACO has already registered as the
equipment, technical solutions and first foreign design company in the FTZ.
regulations in place to protect the
security of information. The facilities ii. Engineering design
and equipment of the service must
also be located inside the FTZ Qualification requirements for foreign
Both the companys major investors invested engineering companies
and senior management team must registered in the FTZ have been relaxed.
have no record of violating Chinese
telecommunication administration and Artwork Trading Services
management regulations in the last
three years Businesses such as art dealers and
auctioneers can take advantage of the
The following areas of telecoms are still FTZs bonded goods function. The FTZ
prohibited or heavily restricted for foreign also offers preferential legislation and
firms in the FTZ as they are outside: facilities for artwork storage, exhibition
and trading which companies can also
Other telecommunication services utilise.
including voice calling
By not needing to pay large amounts of
Radio stations, television stations, customs duties and deposits during the
channels, transmission and coverage period of exhibition, art dealers can enjoy
networks a reduced financial risk. International
auction houses or art dealers can take
Provision of news websites and online this opportunity to enter the China and
audio and video East Asia markets via the FTZ.

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Christies, the British auction house, is Education
currently operating in the FTZ to take
advantage of its new features.
Highlighted New Opportunities:
Shanghai International Artwork Bonded
Trading Center Joint venture educational and training
Located in Waigaoqiao, the Shanghai institutions can be set up inside the
International Artwork Trading Center has FTZ with relative ease, avoiding the
formally operated since September 2013. convoluted approval and registration
It expects to become the largest art processes which remain required
dealing facility in China by 2016. outside the FTZ

The Center offers secure facilities with


strict temperature and humidity controls FTZ regulations allow foreign companies
that allow valuable pieces of art to be to establish educational and vocational
stored safely. Artwork stored in the Center training institutions without complicated
also enjoys the FTZs bonded duty policy approvals and registration from several
which provides companies with greater authorities, provided they are in form of
flexibility on imports. a joint venture.

For more information see: After signing a registration contract in


www.artwgq.com/english/index.php August 2014, Harrow International School
Shanghai is due to open in 2015. This will
Entertainment Agencies be the fourth Harrow International School
in Asia, follows the opening of campuses
The establishment of wholly foreign- in Bangkok, Beijing and Hong Kong.
owned entertainment agencies such
as promoters or events companies are Source CBBC report: China (Shanghai)
permitted within the FTZ and can provide Pilot Free Trade Zone Oct 2014
services for the wider Shanghai area.
Outside of the FTZ, foreign invested
entertainment agencies must be formed Companies who are looking at developing
as joint ventures with a Chinese partner. in China in general or in the FTZ in
The Negative List maintains some particular are encouraged to contact the
restrictions and prohibitions to foreign China-Britain Business Council for a copy
investment in the entertainment sector. of the full guide, or download from the
CBBC website at: www.cbbc.org
This includes restricting all production of
radio, television and film projects to joint
ventures (as found outside the FTZ) and
prohibiting all foreign investment within
the news and publishing sectors.

www.China.DoingBusinessGuide.co.uk 101
ESTABLISHING THE RIGHT pRESENCE
CHINA

Given Chinas sheer size, complex and


changing business environment, as well as
culture and language barriers, it is not an
easy market to enter and exit with a quick
win. To succeed in China requires careful
business planning and execution. Foreign
companies need to take time to build up
their business network and credentials and
to demonstrate their commitment.

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CHINA
Doing Business in China

Establishing the right presence Given these considerations, companies


need to select agents and distributors
Given Chinas sheer size, complex and carefully.
changing business environment, as well
as culture and language barriers, it is not Some of the frequently asked questions
an easy market to enter and exit with a are in the following checklist.
quick win. To succeed in China requires
careful business planning and execution. You should also conduct due diligence
Foreign companies need to take time to to verify this information:
build up their business network and
credentials and to demonstrate their Background
commitment. Often this requires some
sort of presence in the marketplace, Company size, history and ownership
whether directly through your own (private or state owned)
business operation, or indirectly, working
through a strategic partnership such as Quality and quantity of the sales force
an agent or distributor.
Customer feedback and trade/bank
references
Agents and distributors
Distribution channels
An agent is a companys direct
representative in a market and is paid Regional coverage
commission, while a distributor sells
products on to customers after buying Types of outlets covered and
them from the manufacturer their frequency of calling
income comes from the profits they
make on the difference. Transportation and warehousing
facilities
Market entry through working with an
agent or distributor can have several Are they right for you?
advantages, such as reducing time and
costs to market entry as well as gaining Does the agent/distributor have a
the local knowledge and network of the genuine interest in representing your
agent. product?

However, there are some drawbacks to Can they benefit from actively promoting
this approach. Employing a third party your interests (is it a win-win)?
results in an additional cost to your
products and you may also lose some Do they also represent any competing
control and visibility over sales/ marketing. companies/products?
It also has implications for intellectual
property rights protection, increasing the Can you communicate effectively with
risk of your product being copied or your counterpart?
counterfeited.

Visit the Website and download the free Mobile App


Once a working relationship is receive feedback on sales volumes and
established, the agent/distributor needs consumer preferences. However, it may
to be managed actively; this may be be difficult to justify logistical and freight
achieved by the following: costs to retailers unless large volumes are
guaranteed. Even if a company decides
Visiting as regularly as is practicable not to export directly to retailers, CBBC
at a senior management level this recommends that companies should
shows interest in, and commitment to, schedule meetings with retailers when
the agent and the market. This will they visit China. This can increase
also provide you with an opportunity interest in your products via product
to learn about conditions in the introductions, which can later be har-
market and see how your products nessed by your local business partners
are faring. and representatives.

Working closely with the agent to


show them how they can profit from Exporting via UK-based
your products. consolidators/exporters

Helping to prepare marketing and Another option for any UK business


sales plans for the agent. can be to use a British or European
Consolidation company, who can handle
Provide regular training for the sales the exports for you from the UK. This
staff and after-sales training for the option may seem to be the most straight-
technical staff in the UK. forward, but the non-Chinese consolidator
will often either lack the know-how for the
Linking performance to incentives and Chinese market and/or need to use local
agreeing milestone targets. agents and distributors in China anyway,
which will increase costs. It will also
become difficult to control customer
Exporting directly to retailers relationships, or your pricing and brand
image in China.
British exporters can alternatively send
their products directly to retailers without Using your own distribution network
distribution partners in China. However,
goods can only be imported through This option gives you full control over
a company that has an import/export logistics, branding, marketing and
licence under Chinese laws. Only the customer relationships, but it is an
biggest retailers tend to have the relevant expensive option, usually only open
licences; hence, other companies must to the big players.
use a licensed intermediary.

Exporting directly not only makes it


possible to generate better margins,
it is also an opportunity to more closely
understand the retail system in China and

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CHINA
Doing Business in China

E-commerce It is sometimes the case that brands


will only license certain categories to the
E-commerce is rapidly growing in franchisee, allowing them to use designs
China, with 240 million e-shoppers. and produce and/or distribute products
It is an attractive option to those with under their trademark.
little experience of China, who wish to
test their product with Chinese customers Fashion retailers have been among the
before entering the market through other most prevalent users of franchising. It is
means. relatively low-cost, low-risk and can be
a quick way to test consumer demand in
Chinese consumers are less familiar with an unfamiliar and complicated market like
international e-commerce websites and China.
many do not understand English or use
international credit cards. Some Chinese There are brand management specialist
platforms do not require a company to companies that are active in franchising,
be registered in China to sell products especially in the fashion sector. These
on their website, allowing easy purchase companies generally demand exclusive
by Chinese consumers. sales rights in the Chinese market in
order to secure a return for financial
However, using e-commerce without investment.
a presence in China can have
complications in the order process, local A major concern for franchisers is the lack
logistics and after-sales services, which of control involved, especially if they value
may necessitate extra Chinese partners brand identity and customer experience
for delivery. See the E-commerce section as key factors. There may also be
on pages 142 -145 later in this guide, problems due to the franchisees relative
which provides a more complete lack of capital, their business ambition
introduction to e-commerce in China. and vision and even protection of
Intellectual Property. Increasingly, several
international brands that initially used the
Licensing and franchising franchising model to enter the market
have changed their business model to
Licensing and franchising (which become Wholly Foreign-Owned
have strong similarities in China) can Enterprises (WFOEs).
be appealing business models for
international brands seeking to expand
their Chinese activities. The franchiser, Business incubator services
who owns the enterprise, lends their
trademark and/or business model to the If business trips are proving to be
franchisee, who often pays initial and financially onerous or time-consuming,
royalty fees for this right. Franchisers there are other methods to have
are normally involved in initial training, someone represent you in China
site approval, branding and advertising. without incorporating a company locally.

Visit the Website and download the free Mobile App


A medium-term option is to use a Enables trading in local currency
business incubator service; this allows and eases the conduct of business
you to have a year-round representative transactions
on the ground.
Trading in the Chinese currency
Renminbi (RMB), which eases
Establishing a presence through the business transactions
CBBC Launchpad scheme
Total control over brand image
Launchpad provides a simple, cost- and distribution in China
effective, low-risk and legal means of
having a presence in China before you There are a number of structures that
set up your own office there. allow foreign invested enterprises (FIEs)
to conduct various business activities.
CBBC members can have their own
representative working for them in China, These include representative offices,
with their own space in one of CBBCs joint ventures, wholly foreign-owned
13 offices. This is a fast and cost-effective enterprises, and foreign invested
way of enabling companies to test the commercial enterprises. Each of these
local market before committing to a structures has unique advantages,
permanent presence. restrictions and drawbacks, and it is
essential to choose the option best
More details of this service can be found suited to your business aims.
on the CBBC website: www.cbbc.org
The rules and regulations regarding
foreign direct investment and FIEs have
evolved gradually since China began
Establishing a permanent presence opening up to foreign business activities.

Although it is possible to be represented Since Chinas accession to the World


through agents or distributors, many Trade Organisation there have been a
foreign companies progress to the number of amendments to regulations,
establishment of a permanent presence easing market entry for international
in China, as their experience and companies across a range of sectors.
confidence grow. When confidence in the
Chinese market reaches a sufficient level, Companies that desire a permanent
you may consider setting up a permanent presence have to set up operations as
presence in China via a Foreign Invested an appropriate legal entity, depending
Enterprise (FIE). on the intended business scope, and
be compliant with Chinese legal and tax
Having a permanent presence in-market requirements. Under current regulations,
can provide several possible benefits, foreign companies cannot legally employ
including: Chinese staff unless the company is
registered in China. Therefore, if you are
Market presence showing ready to make a long-term commitment,
commitment the establishment of your own legal
presence is the way to go.
Quick and direct access to customers
and/or distributors

Direct control over corporate strategy


and activities

www.China.DoingBusinessGuide.co.uk 109
CHINA
Doing Business in China

However, it is usually more difficult to alter This is the least complicated method for
a business structure once a legal entity is a foreign firm to have a legal presence
incorporated or established, so it is vitally in China and was, at one time, the first
important to seek professional advice on choice for foreign companies with little
your investment structure during the early experience in the country.
stages of planning. You must fully under-
stand your intended business activities However, due to the limited operational
in China (for the short and long term), scope mentioned above, WFOEs are
whether they are practicable, any legal typically a better option for entrants
and sector barriers to entry, and in turn seeking to develop their business in
what the suitable vehicle is for you. the long term in China.

UK Trade & Investment and the Model 2: Joint Ventures


China-Britain Business Council can A joint venture (JV) is an organisation
offer dedicated one-to-one consulting jointly owned by both Chinese and foreign
and incorporation services to assist UK partners. A JV can be formed by way of
companies establishing various kinds equity contribution based on each partys
of permanent presence in China. monetary contribution (Equity JVs) or
by contractual agreement (Cooperative
Please contact one of their offices JVs).
for more details see the Contacts
section of this guide. In certain restricted sectors, such as
insurance and the automotive industry,
Model 1: Representative offices JVs are currently the only permitted route
Representative offices (rep offices) for international companies in China.
are the first step taken by some
foreign companies when establishing However, JVs are now becoming less
a permanent presence in China. They prevalent as Chinese economic reform
are officially liaison offices, and as such has gradually opened up new industries
they cannot generate income through to WFOEs. International companies often
contracts, tax receipts, invoices or prefer the autonomy and flexibility that is
sales activities, but instead are useful for afforded to them through WFOEs, despite
activities such as market research, public the full business ownership risk.
and business relations and support.
However, JVs may be beneficial in
Visiting visas can be obtained more easily various ways. Local partners can
through business visits to rep offices, contribute market knowledge and strong
but only four working visas for foreign marketing and distribution channels and
staff can be obtained, while all local staff they may help reduce the costs and risk
must be hired through a government- of market entry.
approved agency.

Visit the Website and download the free Mobile App


The common risks associated with Incorporating in China
entering into partnerships with other
companies apply in China and are often In the UK, incorporating a company takes
exacerbated by cultural differences and a few days, whereas in China it may take
business practices. Hence, the right several months and involves a complex
partnership is essential in establishing process through which the foreign
and running a successful JV. The ability investor must obtain various approvals.
to maintain effective communication, and
control where necessary, is also crucial. Foreign companies will likely require
professional support on aspects of
It is important that you carry out corporate business incorporation, including tax
and financial due diligence before signing planning, legal advice and project
up to any partnership. JVs should only be management. Foreign companies are
created when both parties have a clear required to use a government-certified
understanding of the business objectives Filing Agent in some regions of China
and when appropriate exit strategies have during this process.
been developed.
CBBC provides detailed guidance
Model 3: Wholly foreign-owned on various issues regarding business
enterprises (WFOE) incorporation in China and offers a
Wholly Foreign-owned Enterprises managed incorporation service. There
(WFOEs) are Chinese-incorporated are also many professional service firms
companies that are fully owned by foreign in the private sector that can help with
organisations. They are currently the most this process.
popular option for foreign enterprises, as
they provide complete control and full
profit from operations, alongside limited Mergers and acquisitions
liability. WFOEs also generally provide
greater protection to intellectual property M&As have become increasingly popular
rights compared to JVs and can directly in recent years for foreign investors.
employ local staff, unlike rep offices. There are numerous options for M&A
in China, including equity and asset
However, they do have a minimum acquisitions as well as mergers. As a
investment requirement that is dependent form of FDI, the general rules on the
upon the locality and nature of the establishment of Foreign-Invested
business. Enterprises (FIEs) also apply to M&As.

WFOEs are the appropriate structure Source: UKTI and CBBC


for companies whose main activities in
China are to manufacture and sell
products, or provide services such as
R&D or business consulting. A WFOE
allows the foreign investor to issue
invoices and receive revenues in
RMB that can then be converted and
repatriated outside of China.

www.China.DoingBusinessGuide.co.uk 111
DKLM SOLICITORS
Our differences are our strengths

Who are we? Our role is primarily to make sure your


transaction or dispute is handled in the
DKLM is an established commercial way you would like it handled but bringing
law firm in the City of London with an an awareness of the legal issues, the
international focus. Our expert teams personalities involved and the cultural
offer a complete range of legal services issues which can affect what you are
to both private and corporate clients. trying to achieve. We pride ourselves
in ensuring all matters are partner led but
We have strong expertise in business ably supported by experienced solicitors
immigration, commercial property, corporate and legal staff.
and commercial, commercial litigation,
employment, private client and estate Our focus is to provide commercial
planning, property litigation and residential solutions as well as dealing with legal
conveyancing. We also provide specialist issues and, most importantly, we are
services for mediation/ ADR, licencing interested in achieving the desired
and tech law and a service office/company objectives. DKLM has a truly international
secretarial service for our international work force with staff who are fluent in
clients. We listen to the needs of our clients Mandarin, Cantonese, Malay, French,
and as they have expanded and grown, Spanish, Gujarati, Urdu, Hindi or Punjabi.
we have also expanded our areas of practice
and have sought out new opportunities What do we do?
both locally and internationally.
DKLM has a strong presence as a
DKLM has a unique Association with commercial property firm being heavily
Zhonglun W & D Law China Law firm which involved with the purchase and sale
is a top ten China law practice. We now have of freehold and leasehold commercial
direct access and support from lawyers in property investments, property develop-
over 11 offices in the major cities in China ment work, leasing of retail units and
to include Beijing, Shanghai, Guangzhou, the purchase and sale of businesses
Chengdu, Jinan, Shenzhen, Shijiazhuang, from the leisure sector such as hotels to
Taiyuan, Tianjin and Wuhan, with new the health sector to include pharmacies,
offices opening in Xian and Nanjing later nursing and residential care homes.
this year. Our Association also includes
PC Woo Solicitors in Hong Kong and Naji Our litigation team deals with both general
Law firm which is based in Riyadh. commercial and property related matters.
We act for both claimants and defendants
How can we help you? in commercial cases of all kinds and at all
levels of the English court system. We
Our clients include private individuals, have a strong thriving residential property
entrepreneurs, UK and foreign owned department which has grown rapidly over
companies and Chinese State owned the last six years due to the exceptionally
entities. high level of service and care provided by
our residential property team where most
of all new matters are still referred from
In association with existing clients and contacts. This level
of service is replicated in all departments
within DKLM.
Our employment department advise on Why DKLM?
legal compliance with employment law,
employment contracts and problems with DKLM has an established reputation
employees. We can also assist in reviewing within the Chinese community in London
or preparing staff hand books, preparing acting for wealthy family trusts, publicly
and advising both employer and employees incorporated companies and Chinese
with employment contracts and advising on state owned companies.
employment issues arising from the buying
and selling of all types of businesses.
Location: We are located in the City of
Our company/commercial department London within easy reach of all the major
deals with the purchase and sale of Chinese banks.
companies and businesses, investments Language: We have Mandarin speaking
into companies or partnerships, joint
solicitors in the Property, Corporate and
ventures and the whole panoply of
Business Immigration departments.
transactions and agreements required
for these kinds of transactions (such Partner driven: We are a full service
as loans and security). In addition, they partner led law firm which has the ability
can assist with commercial contracts, to service the legal requirements and
intellectual property and regulatory
needs for most overseas business clients.
issues especially for tech businesses.
Professional Network: We have a close
We have an established business and established network of professional
immigration department which assists service firms from Accountants to Surveyors
with all immigration issues revolving around and are on the panel of all major banks
the business client and, in particular Tier
and lending institutions in the UK.
1 Investor and Tier 1 Entrepreneur visas.
Our immigration department specialises Keeping in touch: Our partners and solicitors
in immigration from China and assists with regularly present seminars both in London
the movement of business individuals as and in China on various topics to include,
well as assisting the mobility of staff to immigration, property investment and
the UK. We have Mandarin speakers who
buying businesses in the UK.
assist clients through this complex process.
DKLM is a member of UKTI and a
Our private client department assists corporate member of CBBC.
individuals with personal tax planning,
Wills and Trusts. If a client is moving to the
United Kingdom, there are ways of avoiding
overseas income from becoming taxable in
the UK, but this requires care and planning
before the move is made. There are potential

problems with clients world-wide estates
once they become resident in the UK
which may need a Will or a Trust to be put
in place in order to avoid overseas assets
becoming subject to UK taxes. Our lead
Partner in this field is particularly interested
in assisting clients who have assets in
more than one jurisdiction.

Contact us ,
Philip Li Fei Yang
Partner, London Senior Associate
T: +44 207 549 7883 Head of China
p.li@dklm.co.uk Development, London
T: +44 207 549 7451
f.yang@dklm.co.uk

www.dklm.co.uk
CHINA

Before attempting to enter the Chinese market it is important


to identify whether the market is open to you and whether
restrictions apply. Certain sectors, for example military, are
subject to UK controls and these can be identified from the
UK Strategic Export Control Lists.
GETTING STARTED

www.China.DoingBusinessGuide.co.uk 41
115
CHINA
Doing Business in China

Getting started Certification & standards

The Standardization Administration


Market access of the Peoples Republic of China has
responsibility for standards.
Before attempting to enter the Chinese
market it is important to identify whether China sets its own national standards.
the market is open to you and whether These are often referred to as GB
restrictions apply. Certain sectors, for standards with some mandatory and
example military, are subject to UK others voluntary. A prefix code indicates
controls and these can be identified from the status, GB=mandatory and
the UK Strategic Export Control Lists. GB/T=voluntary.

The Chinese Government classifies the Not all Chinese standards are aligned
market for foreign investment or entry into with established international standards.
three categories: encouraged, restricted It is important to check the Chinese laws,
and prohibited. The ability of a foreign regulations, standards and certification
company to operate in China varies in requirements that apply to your area of
line with these, so in some sectors it is business.
possible to set up a 100% foreign-owned
company, but in others entry is possible For some types of product, manufacturers
only through a local partner, and in some must obtain a China Compulsory
it is not possible at all. With some Certification (CCC) mark before you
professions, for example legal, it is can export to or sell in the China market.
possible to enter the market, but The CCC mark is a compulsory quality
operation is severely restricted. and safety mark.

It is important to understand your freedom Chinas National Certification and


to enter the market. Refer to the official Accreditation Administration (CNCA)
Catalogue for the Guidance of Foreign publishes a catalogue that lists all the
Investment Industries, published by products that require a CCC mark.
the Chinese Ministry of Commerce
(MOFCOM), and seek advice from See the CBBCs video on applying
UKTI, CBBC or professional services for CCC marks at:
companies. www.youtube.com/playlist?list=PLv_tMYy
sg7ROD-n2hCkPWBaYTRyxzMpFL

Goods for sale in China must be labelled


in Chinese. For some products, information
must be printed directly onto the packaging.
You should always check the labelling
requirements for your products.

Source: UKTI March 2015

Visit the Website and download the free Mobile App


Legal considerations Guidance on dealing with commercial
disputes in China can be found at:
China has what is officially termed www.gov.uk/government/publications/over
a socialist legal system with Chinese seas-business-risk-china/overseas-busi-
characteristics. Technically, the legal ness-risk-china#commercial-disputes-in-
system is based on both statutory law china
and custom. The National Peoples
Congress (or its Standing Committee) The UKTI teams in China can help you
enacts national laws while the State find tax and legal advisers before entering
Council (effectively the Chinese govern- into any agreements. See the Contacts
ments cabinet) implements and enforces section at the end of this guide for details
administrative regulations and rules of posts in China.
nationwide.

The ministries under the State Tax and customs considerations


Council put into effect specific national
administrative regulations and rules, The UK has double taxation agreements
and can be authorised to issue in place with China. A guide to Tax
interpretative implementing rules. treaties between the UK and China and
Provincial representative bodies known related documents can be downloaded at:
as peoples congresses may also enact www.gov.uk/government/publications/
local rules and regulations where these china-tax-treaties-in-force
are not contradictory to laws, regulations
and policies enacted at the national level. Value Added Tax (VAT)
VAT is charged on the sales and import
In addition, the Supreme Peoples Court of goods as well as processing, repair
issues judicial interpretations from time and replacement services. There are
to time, which all lower courts are exemptions for the import of certain
required to follow in adjudicating cases. goods identified in relevant regulations.
Apart from this, there is no general The basic VAT rate is 17%, but a lower
system of precedent followed in Chinas rate of 13% is levied on a number of
courts. After a period of intensive statutory goods.
development over the past 20 years,
China now has a relatively complete Consumption tax
basic legal system in place. 14 categories of goods are subject to
consumption tax. The rate is calculated
You must identify whether the market based on price and is between 1% and
is open to you and whether restrictions 56%.
apply. In some sectors it is possible to
set up a 100% foreign-owned company.
In others entry is possible only through
a local partner.

www.China.DoingBusinessGuide.co.uk 117
CHINA
Doing Business in China

Corporate tax Documentation


Goods being exported to China must
Taxes applicable to a Foreign Invested comply with domestic legislation.
Enterprise (FIE) include:
Certificates of quality, quantity or
enterprise income tax 25% (rate weight issued by manufacturers or
for SMEs under Chinese law is 20%) public assessors are normally required.
However, goods will be returned to the
business tax usually 3% or 5% seller if the goods do not conform with
the certificates after re-inspection by
The EU SME Centre at: www.eusmecen- the Chinese authorities. In addition, a
tre.org.cn/guideline/china-enterprise-in- claim may be lodged for compensation.
come-tax provides information on
Enterprise Income Tax in China. Please check with CBBC business
advisors for further advice.
All service companies obtaining income Source: UKTI March 2015
in China or with consumers located in
China are subject to Chinese taxes,
unless exempted expressly by Chinese Management, control and quality
regulations. assurance

Income tax With the challenges of distance, language


Individual income tax is charged and culture, many UK companies are
between 5% and 45%. tempted to take a hands-off approach
to transactions and operations in China.
Customs considerations In fact, these challenges increase
The General Administration of Customs the need for proactive engagement.
of the Peoples Republic of China A hands-off approach allows problems
provides information on customs to develop, often to the point where they
procedures and tariffs. become major issues.

China customs uses a valuation database Once a business presence has been
that lists the values of various imports achieved, companies often report
based on international market prices, numerous obstacles to successfully
foreign market prices and domestic implementing their business plan,
prices. Importers values are normally including factors such as protracted
accepted, but if they are out of line with lead times from suppliers, supply chain
the valuation database there may be a management and quality control issues,
recalculation. administrative delays which result in
longer lead times for client organisations,
You can find more about import tariffs in the management of risk, problems
the EU Commission Market Access Data- with obtaining finance, banking system
base at: www.madb.europa.eu/madb/ inefficiencies, and infrastructure
indexPubli.htm deficiencies.

Visit the Website and download the free Mobile App


There is no simple solution, and successful OMIS can also be used to engage CBBC
UK companies use a variety of techniques. to arrange a technical seminar or product
These can include extensive travelling introduction event in China, which can be
by UK personnel, a controlling or liaison an effective way of getting your message
presence in China (such as using CBBC across to a number of potential customers.
Launchpad), or providing extensive
training and good management of Attend trade shows and exhibitions:
Chinese staff. It is important not to allow
milestones to slip by, whether these Numerous trade shows and exhibitions
are attending a board meeting in a joint take place in mainland China and Hong
venture or arranging a quality audit at Kong throughout the year and these can
a supplier. be an excellent way to meet potential
customers face to face. However,
Sourcing products from China, especially arranging appointments in advance
from a supplier inexperienced in dealing to meet pre-identified contacts at niche
with foreign companies, requires industry events is essential if you want to
particular attention to detail. Specifica- make effective use of your time. Through
tions are sometimes not understood OMIS, the UKTI Hong Kong team is
and need to be very clearly explained able to connect you to a wide range of
and agreed, and a quality management opportunities to break in the Hong Kong,
system needs to be agreed and put in and potentially China, markets.
place with the Chinese company. Many
consultancies will offer to undertake all Take part in a UK Trade &
or part (e.g. the quality management Investment-supported trade mission:
aspects) of this process on your behalf.
A list of consultants can be found on the UK Trade & Investment supports a large
CBBCs China Business Services number of trade missions to mainland
Directory at www.cbbc.org. China and Hong Kong organised by
CBBC, trade associations and local
chambers of commerce.
Finding a customer or partner

Once you have identified where you Due diligence


would like to start and the best market
entry option for your company, the next The vast majority of problems that foreign
step is to find potential customers or companies encounter when engaging in
partners for your company. The following business transactions in China could
are all effective ways of finding potential have been avoided by carrying out some
customers, agents, distributors or due diligence at the start of proceedings.
partners: Undertaking market research and due
diligence prior to entering into any formal
UK Trade & Investments Overseas dealings with Chinese companies is
Market Introduction Service (OMIS): essential. However, this may be much
harder to do in Chinas regional cities,
This can be used to tailor-make a list of where market and firm-related information
potential customers, agents, distributors is likely to be less readily available than in
or partners and arrange a programme Chinas more advanced cities, and about
of meetings with them for when you visit which knowledge and experience in the
China. In China, CBBC provides OMIS foreign firm will need to be accrued over
services on behalf of UK Trade & time.
Investment.

www.China.DoingBusinessGuide.co.uk 119
CHINA
Doing Business in China

There are different levels of due diligence The local AIC bureau is the Chinese
that are appropriate for different situations. equivalent of the UKs Companies
If your sole interest is in exporting, the House. All companies in China are
best proof of a Chinese companys ability legally required to register with their
to pay is whether it is able to raise a letter AIC bureau at the municipal level to
of credit from the bank. If so, you do not obtain their business licence.
need to check the companys financial
standing as the bank will have already You will have more security if you know
done so. At the end of 2008 Chinas credit who the legally responsible person is,
database contained the personal records so find out who you are dealing with.
of 640 million individuals and 14.47 If problems occur, it will be much easier
million companies and is the largest to address issues with the legally
credit information pool in the world. The responsible person, rather than a
database includes loan, credit card use, middle man, who may go missing
insurance and bill payment information when problems arise.
of individuals and companies and is used
by financial institutions in China to make The shareholders of the company are
personal credit checks on loan applicants responsible for that amount of liability
and carry out due diligence on registered listed as registered capital on the
Chinese companies. companys business licence. You can
check whether or not the registered
One simple piece of due diligence capital has been paid up by using a
you can conduct is to get a copy of firm of accountants to get a Capital
a companys business licence which Verification Report.
will tell you the following:
If you want to establish a business
The legal representative of the relationship that goes beyond exporting,
company you will need to carry out further research.
The name and address of the A thorough evaluation of your potential
company partner may be time-consuming and
The amount of registered capital expensive, but doing so will greatly
which is also its limited liability reduce the risk of serious problems in
The type of company the future. However, it is not enough to
The business scope obtain a copy of a companys accounts,
The date it was established and the as they may not be accurate.
period of its business licence
Accounts are unlikely to be audited to the
You should check that the information standards routinely expected in the UK,
contained in the business licence and companies may have different sets of
matches what you already know and if it accounts for different audiences, so it is
doesnt then find out why. If you want to advisable to use such data in conjunction
verify the information externally you can with information obtained elsewhere.
do so through the State Administration
of Industry and Commerce (SAIC).

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There are a number of private consultancies Associated with this is the importance
that specialise in carrying out operational, of transferring established business
financial, legal and technical due standards, codes of practice, operating
diligence checks on Chinese companies, procedures and internal control
typically by looking at the actual operation mechanisms to China in a way that
of the business, and building up a more operations there are managed and run
accurate picture by carefully interviewing no differently from those in other foreign
people who work in and with the markets.
company.
However, finding the people you need
A particular obstacle that British to run your business in China is not
companies must overcome is the significantly different from recruitment
reluctance of many Chinese business in the UK. There are several recruitment
partners to agree to thorough due agencies currently operating in China,
diligence investigations. Failure to gain a and most operate under the same
full understanding of a potential partners standards that you would expect of a firm
credit history and professional back- in the West. They will do the sourcing,
ground can spell serious trouble and pre-interviewing of candidates and charge
financial loss. It is possible to reduce you a percentage of the placed staffs first
local concerns over due diligence checks year earnings or a one-off fee.
through a patient and polite business
approach and by stressing the reciprocal In addition, there are a number of
nature of the arrangement, but you should recruitment websites advertising for both
expect this stage of negotiations to be jobseekers and employers, which can
lengthy and at times difficult. Good quality be highly effective. Another option is to
consultancy and assistance is available recruit from the huge Chinese population
from experienced firms resident in China. at UK universities. Visa regulations allow
Chinese graduates to undertake training
Finally, do as the Chinese do. Expect and work experience in the UK, before
to spend a lot of time at meetings and moving to China to take up positions.
banquets with your potential Chinese
partners. You might think this is a slow One challenge that companies recruiting
progress, but the Chinese are using this in China will face is the increasing
time to establish whether you will make competition for experienced managers
a suitable and trustworthy partner and high-calibre individuals, and as
and whether they want to enter into a Chinas economy continues to grow
long-term business relationship with you. this will only intensify. Skills levels of
employees can be an issue at all levels;
It is wise to do the same. Building in many locations demand for skilled
relationships is by some distance the best workers outstrips supply. Local education
way to overcome many of the obstacles establishments will often assist with
to doing business in China. collaborative programmes, but this can
have significant lead time.

Employing staff Local and foreign companies are recruiting


from the same pool of employees who
You will likely need to establish a strong have the right technical and language
management team to build your business skills as well as managerial experience.
in China, including securing clear and
committed support from all levels of your
parent company, and assigning good
quality professional staff to plan and
manage the China-based operations.
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CHINA
Doing Business in China

Candidates with the requisite skills Ensure that you hire staff at the right
and experience will be in demand level for the role: A recent MBA
and command high salaries. If you graduate returning from overseas
are not prepared to offer appropriate may not have the experience to
remuneration, you will have great navigate the complexities of setting
difficulty hiring people with these skills. up a company in China without
Many employees will leave their current seeking professional advice, and they
companies for ones that are offering may not have the capabilities to
better remuneration packages. develop business at a senior level.

You will need to determine what you Carry out due diligence: To ensure
are willing to pay at the beginning of the that the staff you are hiring are right
recruitment process. It is important to note for your company, it is essential to
that salaries in China have increased over ensure thorough due diligence in
the last few years and will continue to do recruitment, especially for senior
so. It would be advisable to conduct some managers, including conducting
market research to get a clear idea of personal background checks and
appropriate salary levels for the positions checking all references before
you wish to fill so that you can make an offering them the position.
offer that is in line with current market
rates. Offer appropriate compensation:
Once you have found the right staff
When you are recruiting in China make you will need to give them good
sure that you carry out all the normal reason to stay with your company.
steps that you would if recruiting in the You will need to provide sufficient
UK: compensation to ensure that you
recruit and retain the best employees.
Ensure that candidates technical and Offering employees the opportunity to
linguistic capabilities match their train overseas is also very attractive
claims: It is essential to hire staff with at all levels, although make sure that
the right language skills. Common in return for providing such training
mistakes include hiring Chinese staff they make a commitment to stay with
from outside mainland China who your company. In addition, be sure to
do not speak Mandarin to the level invest in the mentoring of Chinese
required, or alternatively hiring staff management-level talent; this can be
whose business English is not done by giving them experience of
sufficiently fluent for their role. working around the organisation and
grooming them for global corporate
positions. A clearly defined career
progression route is also attractive
and will help to retain staff.

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A lot of smaller companies setting up an It is important that the employee receives
office in China may well just employ one an original copy of the contract signed by
person to deal with all aspects of running the employer and that the employer gets
the business. Although this may be the employee to sign that they have
convenient and cost effective, it might received the contract.
not be the best way to run your China
operation. Staff selection will prove vital, It is also very important that, in addition
and although the individual may be very to the contract, all employees are given
willing, honest and capable, they may (and sign to say they have received) a
not be competent or experienced in company rulebook detailing all aspects of
international business practices. your company policy and what behaviour
is and isnt acceptable. If there are any
Also, foreign companies in China are at cases of misconduct you will find it almost
the top of official radar screens. If your impossible to terminate staff employment
employee is not familiar with the relevant without written evidence, so make sure
Chinese rules and regulations pertaining that such evidence is documented.
to the running of an international office
or business in China, then you may There is additional information on
soon have to deal with issues of employing staff on the CBBC website
noncompliance, which can be very costly. www.cbbc.org and many international law
In addition, having one person in control firms have guides to the new employment
of all financial and legal aspects of the laws on their websites.
business is obviously risky.
Foreigner Participation in Chinas Social
An attractive solution to this problem Insurance System
would be to use a service such as On 15th October 2011, the Interim
CBBCs Launchpad Scheme where Measures for Participation in Social
companies can have a representative Insurance System by Foreigners came
located in one of CBBCs China offices into effect. The Measures mean that
and benefit from the support of CBBCs foreigners employed in China who have
management and local team. See details obtained a Permanent Residence
of the scheme elsewhere in this guide, Certificate for Foreigners, or employment
or on the CBBC website: www.cbbc.org certificates such as the Employment
Permit for Foreigners, the Certificate of
Foreign Experts, or the Certificate of
China's Labour Law Permanent Foreign Correspondent are
now required to participate in the
If you are employing staff in China you will countrys social security system.
need to make sure that you comply with
Chinas Labour Law, which came into Five kinds of insurance contributions are
effect on 1 January 2008. According to to be made: basic pension insurance for
this law all employees must have a written employees, basic medical insurance for
contract. If this is not signed within one employees, work-related injury insurance,
month, then you will have to pay the unemployment insurance; and maternity
employee double their salary for every insurance. Social insurance fees are to
month they are without a contract. If they be paid by both employers and foreign
are still without a contract after a year employees in accordance with the
then they are automatically deemed to be regulations.
on an open-ended contract.

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CHINA
Doing Business in China

The Measures state that employers must The only situation in which foreigners
undertake social insurance registration will be able to avoid making contributions
for foreign employees within 30 days of is where they meet the requirements
applying for their employment permits. specified in bilateral or multilateral
Failure to conduct registration and agreements, of which there are currently
payment for social insurance may mean only two (Germany and Korea). Even
employers are subject to financial these agreements only allow citizens of
penalties. these countries to opt out under certain
circumstances.
Social Security Law
The changes will add extra costs to all There is still a lot that remains unclear,
businesses employing foreigners as they and there are some outstanding issues
are now required to make contributions that still need to be clarified:
on their behalf. This will hit schools
and SMEs that hire a large amount of Pension: How to reclaim the lump
foreigners particularly hard, and may sum? In the event of death how will
result in employers turning away from payment to a relative be organised?
hiring foreign workers. There is, however,
a cap for the amount of contributions Medical insurance: At which clinics
made, based on three times the local can medical insurance be claimed
average salary. Although, this is not International sections of domestic
universal and the city of Dalian has hospitals or international clinics?
already removed this cap (which could
mean that employers have to pay up Maternity insurance: Foreign women
to 37% of an entire monthly salary are not restricted to having one baby.
paid to their foreign employees). Can they use the policy multiple times
or just with their first-born?
Foreign employees are also required to
make contributions and despite the cap Unemployment insurance: If a
this is still a substantial cost for lower-paid foreigner loses their job, they are not
foreign workers. allowed to reside in China, thus they
cannot take advantage of this
Although the new tax requiring insurance.
foreign workers to pay social security
contributions is currently in effect,
the system for registration and
implementation of the tax is not yet fully
operational, and some businesses have
not yet been able to register foreigners
with their relevant social security bureaux
or make payments.

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Language If you are working in southern China, in
the area between Guangzhou (formerly
In order to communicate effectively in Canton) and Hong Kong, do not assume
China it is essential to communicate in that the business language is Cantonese.
Chinese.
This region has a vast population of
Despite clear efforts made by many firms immigrants from non-Cantonese speaking
to localise their business model and to parts of China working at all levels. For
use Chinese staff in key managerial the majority of contacts in southern China,
positions wherever practicable, language Mandarin is the language of business.
and cultural barriers remain a significant If in doubt, ask first. If you are going to
operational issue for many. These issues Hong Kong, Cantonese is the preferred
may become magnified in those regional Chinese dialect, although Mandarin is
cities away from the coastal regions of increasingly spoken in business circles.
China, where the history of foreign English is also commonly used for
business engagement is much shorter, business and remains an official language
and where familiarity and understanding in Hong Kong.
with foreign business practices and needs
are likely to be less well developed. While an increasing number of Chinese
companies particularly those with an
Communication is crucial to the success international outlook have English
of any company, yet business is all too speakers on their staff, dont assume that
often lost through simple misunderstand- everyone in the company speaks English
ings that could have been easily avoided. especially decision-makers. At the very
When working across different time least, get a Chinese name for your
zones, cultures and languages the company and prepare a one-page
chances for misunderstanding are company profile in Chinese for insertion
multiplied considerably. It is therefore into your company brochure and website.
essential to ensure that you have an A Chinese translation of your brochure
appropriate communications strategy not would be even better.
just for China, but for the region of China
you are considering, be it a regional city, Business cards are essential. It is wise
a city cluster, or Province. to have your business card translated into
Chinese, and to bring plenty with you.
Your translator or interpreter is therefore Ensure that all your translation is done
one of your key assets and should be professionally. For names it is important
selected with care, as without them you to use characters which not only
are effectively deaf and dumb. The represent the word phonetically but also
national language of China (including have a symbolic or auspicious meaning.
Taiwan), Putonghua, is commonly known It is worth talking through the choice for
in the UK as Mandarin Chinese and on names with your translator. There are
the mainland the characters used to write numerous translation and interpreting
it are known as Simplified Chinese. This agencies which can carry out suitable
was introduced by the Government in translations of personal names as well as
the 1950s and is increasingly used by general translation work. Many of them
Chinese communities abroad, although will also be able to help you address the
traditional characters are still used in branding issues detailed in this guide.
Hong Kong and Taiwan.

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CHINA
Doing Business in China

Interpreters It is better to be slightly restricted and


speak close to a script than to fail to sell
A growing number of younger Chinese yourself. If you are giving a speech, give
managers and government officials speak the interpreter the text well in advance
English to a good standard, particularly in and forewarn them of any changes.
advanced sectors such as ICT, but you
will usually need to use an interpreter If you decide to bring an interpreter with
for formal meetings and negotiations you (for example, an overseas Chinese
in China to prevent the discussions from Hong Kong or Singapore), ensure
being hampered by misunderstandings. that they speak clear and comprehensible
Mandarin. If you are travelling to an area
A good interpreter is the key to successful where there is a regional dialect, it is
communication. If they have not also essential to check whether your
understood what you have said, your interpreter can also speak and under-
message will be lost on your audience. stand this.

There are two forms of interpreting. Getting the best out of your interpreter
Consecutive interpreting means you
speak and then your interpreter speaks; Hiring a well-briefed professional
this is the usual form for meetings, interpreter is the best policy. Though
discussions and negotiations. this is likely to be expensive, it will be
money well spent.
Simultaneous interpreting involves the
immediate translation of your words as The Chinese will usually, but not always,
you speak them. This requires special provide one interpreter for their side. It
equipment and can be expensive. It is is advisable to have your own interpreter
generally used only for large seminars available to assist with discussions,
and conferences. Interpreting is a skill when possible. One interpreter working
requiring professional training. Bear in for both sides may become tired and start
mind that just because someone is fluent missing the meaning or detail of what
in English and Chinese it does not is being said.
necessarily mean that they will make
a good interpreter. Chinese partners often spring interpreting
on junior staff who have studied English
If you are giving a speech or presentation, but are neither experienced at interpreting
remember that the need to interpret nor pre-briefed on the topic of the
everything will cut your speaking time meeting. With your own interpreter, you
approximately in half (unless using should also have some feedback after-
simultaneous interpreting). It is essential wards on the nuances behind what was
to make sure that the interpreter can cope said (and just as importantly not said)
with any technical or specialist terms in during the meeting.
the presentation.

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Try to involve your interpreter at every Make sure your message is getting
stage of your pre-meeting arrange- through clearly and in a tone that will not
ments. The quality of interpretation cause resentment. But be prepared in
will improve greatly if you provide the response for the propensity of the
adequate briefing on the subject Chinese language to be ambiguous.
matter. Ensure your interpreter
understands what you are aiming A list of Chinese translators and
to achieve. interpreters can be downloaded from:
www.gov.uk/government/organisations/uk
Speak clearly and evenly with regular -trade-investment
breaks for interpretation. Dont ramble
on for several paragraphs without
pause. Your interpreter will find it hard Entry requirements
to remember everything you have
said, let alone interpret all your points. You should obtain a visa to enter
mainland China before arrival. You can
Conversely, dont speak in short find details of visa requirements on the
phrases and unfinished sentences. Chinese embassy website:
Your interpreter may find it impossible www.chinese-embassy.org.uk/eng/visa/
to translate the meaning if you have
left a sentence hanging.
Travel advice
Avoid jargon, unless you know your
interpreter is familiar with the If you are travelling to China for business,
terminology. check beforehand the FCO travel advice
page at:
China has no single number for www.gov.uk/foreign-travel-advice/china
million or billion which are translated
respectively as one hundred ten Source: UKTI March 2015
thousand and ten hundred million.
However, it does have unique numbers
for ten thousand and one hundred
million wn and y. Therefore,
the chance of mistranslation of large
numbers is high, so make sure you clarify
numbers by writing them down.

Listen to how your interpreter interprets


what you have just said. If you have given
a lengthy explanation but the interpreter
translates it into only a few Chinese
words, it may be that they have not fully
understood. Or they may be wary of
passing on a message that is too blunt
and will not be well received by the
audience.

www.China.DoingBusinessGuide.co.uk 127

1992

563

PE
REITs

2008

Overview of Zhonglun W&D Law Firm


Founded in 1992, Zhonglun W&D Law success. We are not only a leading
Firm is one of the earliest-established Chinese law firm in traditional areas of law,
Chinese law firms approved by the but also a frontrunner in advising clients
Ministry of Justice. Primarily a large- on their most important and challenging
scale full service law firm, Zhonglun W&D assignments in emerging areas such as
embraces substantial international private equity, structured finance and
elements. We are the first Chinese law firm securitization, cross-border corporate
to set up dual-jurisdictional office abroad. transactions, real estate development
Headquartered in Beijing, the firm has and investment trusts.
China-based offices in Shanghai, Tianjin,
Chengdu, Shijiazhuang, Taiyuan, Wuhan, Our aim is to become a leading Chinese
Chongqing, guangzhou, Jinan, Shenzhen law firm with significant international
and Xian co-functioning with our dual- outlook. We intend to build client relation-
jurisdictional offices in London (UK) ships that endure through business cycles
and Riyadh (Saudi Arabia) and our and meet our clients highest expectation.
representative/associated offices in Our practice has also gained high-level
Hong Kong, Lyon, Paris and major recognition by the Chinese government.
cities in the US. We are honoured to have advised the
government in various legislation revision
The multi-national and multi-lingual nature and been engaged in influential projects
of our team consisting of approximately commissioned by the governmental
563 lawyers and employees enables us departments such as Beijing 2008
to provide streamlined first-class legal Olympic Games, South to North Water
service to our diversified Chinese and Diversion Project, Sichuan-East Natural
overseas clients from our strategically Gas Transmission Project, Central Asia
placed branch offices across the world. Gas Pipeline Project and the 60th
Our working languages include Chinese, anniversary of the founding of the PRC.
English, French, Korean, Japanese and
Arabic. Our team is licensed to provide in association with

legal advice under Chinese, Anglo-


American as well as Islamic law.

Our ability to quickly get to grips with


new developments in businesses and
regulations is a key strength to our
CHINA

The Chinese market is constantly changing, but as


income levels rise across China there is an increasing
number of new consumers and first-time buyers who
wish to purchase and experience new products and
services. However, the Chinese market is evolving
rapidly and to win these new consumers over you will
need to continually reassess your marketing strategy
to help raise the image, profile and understanding of
your business in China.
MARKETING

www.China.DoingBusinessGuide.co.uk 131
CHINA
Doing Business in China

Marketing For example, the number 4 is regarded


as unlucky, as the word four in Chinese
The Chinese market is constantly sounds similar to the word for death, but
changing, but as income levels rise 8 is regarded as lucky, as eight sounds
across China there is an increasing similar to the words for prosperity and
number of new consumers and first-time wealth.
buyers who wish to purchase and
experience new products and services.
However, the Chinese market is evolving Cultural issues relating to marketing
rapidly and to win these new consumers
over you will need to continually reassess The concepts of good and bad luck, or
your marketing strategy to help raise the auspicious and inauspicious symbols,
image, profile and understanding of your are emotionally important to many people
business in China. in China.

Tradeshows and exhibitions are very Therefore, in order to maximise the


good ways of meeting potential customers, success of your products, make use of
but you still need to persuade them to buy positive symbols and avoid those with
your product. You will need to ensure that negative connotations:
your sales literature is effective in English
and Chinese and decide what kind of 4 is regarded as unlucky, as four
advertising is appropriate. You will almost sounds similar to the word for death.
certainly need to adapt your products
to meet Chinese preferences or 8 is regarded as very lucky, as eight
requirements in order to be able to sell sounds similar to the words for
them. Ignoring local regulations, tastes prosperity and wealth.
and cultural preferences is a recipe for
failure. 3 is also lucky, as it sounds similar
to the word for life in Cantonese.
For example, a lot of Chinese consumers
attach much more importance to the 9 is also positive as it sounds like
functional aspect of many products than the word for eternity or long term,
we do in the UK, so Chinese marketing while 6 sounds similar to good
campaigns may focus on these features progress.
rather than on what the product says
about you as an individual. In Cantonese, 2 sounds like yi
(easy), so placed before lucky
Also, the concept of auspicious and numbers will sound like easy luck,
inauspicious symbols is emotionally e.g. 23 (easily growing), 26 (easily
important to many people in China. Many profitable), 28 (easily prosperous) and
companies make use of positive symbols 29 (easily enough). But avoid placing
and avoid those with negative connotations before unlucky numbers, e.g. 24
in order to maximise the success of their (easy death). 2424 would be
products. particularly bad!

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Some consider 13 is unlucky because Therefore building brand recognition is
1+3=4. very important for newcomers in China
who want to really make an impression.
In Cantonese 7 sounds like chut (for
sure), so placed with lucky numbers 2 Well-designed marketing materials are
and 8 means certainly easy (72), essential to help a product stand out
and prosperous for sure (78). Using from other similar products and capture
the same logic, obviously avoid 74. peoples imagination. UK enterprises
need to focus on presenting the
Red and yellow/gold are regarded as uniqueness and specific qualities of
lucky, but avoid white, which is their products compared with competitors
associated with mourning. and the advantages of purchasing them.

Use images of auspicious animals: Brand names and marketing messages


dragon, phoenix, unicorn, tortoise Conventional marketing wisdom says
(the Buddhist symbol of learning), that global brand consistency is important,
crane and fish. but the Chinese language presents some
very specific branding issues. In order to
Images of the Great Wall indicate create a favourable impression of your
stability and reliability. company and your brand in China, it is
essential to have a name that Chinese
Avoid name plaques for opening consumers can remember.
ceremonies, as these are equivalent
to your standing next to your tomb! If a product name can not be remembered,
it is unlikely that many people will buy it.
Also avoid black borders around It is therefore essential to have a suitable
names or photos of people, since this Chinese company and product names in
is also associated with death. order to sell your products. If your target
market is mainland China (as opposed to
Hong Kong), it is not advisable to have a
Branding Cantonese translation of your company
name, as this will not be readily under-
Strategy and brand building stood outside Hong Kong.
For many international companies, one
of the key market entry barriers in China The Chinese translation of Coca-Cola
is low brand awareness in the local is an example of best practice and
market. A UK business may be well highlights the issues involved in creating
known in Europe, but it is still important a suitable name.
for the business to position itself suitably
within the Chinese market.

Chinese customers place a strong


emphasis on brands that they have heard
of, and those which are well established
within the marketplace.

www.China.DoingBusinessGuide.co.uk 133
CHINA
Doing Business in China

Coca-Cola in Chinese is Kekou-Kele Images of animals are used to convey


which not only sounds like the English meaning and Chinese often use a dragon,
but can also be translated as Tasty and phoenix, unicorn, tortoise (Buddhist
Joyful, thus creating a name that is easily symbol of learning), crane and fish to
memorable for Chinese speakers convey attributes such as vitality,
while retaining some degree of global strength, longevity, beauty, intelligence
consistency. Another good example is or versatility.
B&Q, whose Chinese name is Bai An Ju
and can be approximately translated as It is advisable to spend some time getting
Hundred Peaceful Homes. this right. The name is, after all, the first
thing your potential customers will see.
A translation of a Western company name There is no right or wrong way when
that is perhaps not quite as good as it translating into Chinese the name
could be is the translation of Google into you will ultimately end up with will be
Gu Ge which, although sounding similar, a combination of the translators
means Song of Millet, and Microsoft recommendations and your own
originally translated into small and preferences.
flaccid, but not surprisingly this was
not the final meaning chosen.
Having a geographical focus
The concept of symbols is emotionally Almost the same size as Europe, with
important to many people in China. twice the population, China should NOT
be regarded as a single national market,
Therefore, many companies make use but as a varied region made up of over
of positive symbols and avoid those 30 different provinces and municipalities.
with negative connotations in order to
maximise the success of their products. Coastal first-tier cities in the east of
China, including Beijing and Shanghai,
For example, the number 4 is regarded have been characterised in recent times
as unlucky and 8 is regarded as lucky, by rapid and continuous growth and vast
because when spoken they sound like consumer markets have emerged with
death and wealth respectively. So many rapid sales growth for international labels
businesses avoid the number 4 and often and luxury goods.
use the number 8 in promotional
activities, branding, pricing offers However, some markets within these
and telephone numbers. first-tier cities are even becoming
saturated and the emerging markets
Images and colours are also important. in inland second-tier cities such as
Red and gold are regarded as lucky Chongqing, Chengdu and Changsha
colours, but white is associated with cannot be ignored. The increasing middle
funerals and death. class population has led to a sharp
increase in brand awareness and
consumption.

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Apart from the increased buying power, These individual clusters are areas where
there is a lack of globally-recognised the marketing of a product or service can
brands in these second-tier city markets. be launched and maintained. For all these
Establishing a presence early on is an reasons, for companies making a market
option that helps protect the brand from entry and even for companies who have
the fierce competition it would face in a presence in another region of China,
the well-developed regions. adopting a City Cluster perspective
offers structure to the modelling of their
Though it is often said that China is a development strategy. See the Choosing
land of regions differentiated by local the right location in mainland China
languages, foods and customs, this is an section on page 61, for more information
oversimplification of the country and does on regional cities and city clusters.
not relate to the needs of companies.
Issues relating to law, taxation, product
quality and government procurement are Day-to-day communications
certainly national. However, what is more
relevant to business is the identification Once you have made contact with a
of sources of raw materials, supply chain Chinese company it's likely that your day-
and clients that can be most efficiently to-day phone and email communications
joined through a companys manufacturing will be in English with one of the
and sales bases and networks. companys English-speaking members
of staff.
For companies who are able to define a
client base, either consumer or corporate, If you do not think the standard of English
within a City Cluster it is important to in the Chinese company is up to scratch,
note that marketing activity to raise client you might wish to ask for parallel Chinese
awareness may be localised. Successful texts and get them translated; this could
brand recognition in one City Cluster be a valuable investment. An important
does not automatically lead to recognition part of setting up arrangements in China
outside that cluster. As each of these is to ensure that communication issues
clusters is similar in size both by are covered in detail.
population and land mass to the UK,
this leads to the potential of a more If you are going to sign anything as
manageable market entry strategy, obvious as it sounds make sure you get
particularly for SMEs. it translated first, and by an independent
translator. Do not rely on your customers
City Clusters therefore offer a defined or suppliers translation and do not be
geographical perspective of what can pressured into signing anything that you
otherwise be a vast and intimidating do not fully understand. Most failures
market. Most of the clusters are within occur in relationships because of
the constraints of a single province and fractured communications and mutual
so the politically driven economic direction misunderstandings.
for the cluster can be more easily
determined. As areas of large population, If China is likely to become a significant
the size of the client base for either part of your business, you should
consumer or corporate markets supports consider hiring a Chinese-speaking
a sustainable business model. Infrastruc- member of staff.
ture, physical and business services are
well established.

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CHINA
Doing Business in China

There is a rich pool of talent in the huge Customer service and after-sales support
number of Chinese students graduating One of the core USPs for many UK and
from British universities, who are keen other Western companies is the provision
to have internships or short-term employ- of high quality customer service and after-
ment in the UK before returning to China. sales support to clients in their domestic
These students can also be recruited market.
through specialist recruitment agencies.
However, due to the geographic scale
You may also wish to take up the of the Chinese mainland it is difficult for
challenge of learning Chinese yourself companies to deliver high-quality on-site
even having a basic level of communication support. For those companies that do
will create a positive impression and will want to deliver after-sales service in
have the added benefit of making your China, one of the key solutions is to
trips to China more enjoyable. invest in training and management of
partners in China to ensure that your
However, even if you do attain a business is represented in a way that
reasonable level of fluency (which can reflects your brand values and also
take over two years with dedicated study), ensures the appropriate levels of
an interpreter or a Chinese-speaking services for your customers.
member of staff is still an essential in
business meetings.
Developing a business development
strategy
A note on numbers
Outlined on the next page are some of
Large numbers are particularly tricky and the key considerations and questions to
often interpreted wrongly, sometimes ask before developing a market entry or
leading to a mistake between millions and business development strategy for China.
billions. For example, 10 million translates CBBC can help you at every step learning
into Chinese as 1,000 ten thousands; about and targeting these middle-income
100 million has its own character as consumers in China.
and 1,000 million or one billion translates
as ten times 100 million, or . There
is plenty of scope for confusion. Get
numbers written down in Arabic numerals.

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Doing Business in China

Market information gathering: Product & service provision:

Undertake some dedicated and Consider specific needs of Chinas


specific market research consumer middle income consumers that need
trends, perceptions, tastes and you to alter the product/service
preferences offering

Understand the competition and their Focus and emphasise product/service


relative strengths differentiators in China such as
quality, novelty, customer services
Local knowledge and insight: and after-sales

Explore entry barriers, regulations, If you cant compete on price, then


logistics, IP, customs and tax dont compete on price

Visit various locations yourself (not Branding & communications:


just Beijing or Shanghai) and spend
time learning the market Dont rely on foreign or British brand
superiority have a clear message
Utilise local contacts, networks, for the middle income consumers
advisers who know the market
Develop a social media plan, have
Targeting and positioning: China specific promotions, discounts,
VIP range/services and loyalty
Segment this target group into schemes
focused sub-segments by location,
and also by behaviour, attitude and Invest in learning about this large and
lifestyle diverse group of consumers who
will buy your product/service and
Focus target smaller sub-segments, why?
and develop plans on how best to
reach them and serve them

Market entry decisions:

Explore various channels to market


and business models

Consider working with partners,


distributors and agents

Explore Chinas e-commerce


channels and opportunities

www.China.DoingBusinessGuide.co.uk 137
CHINA
Doing Business in China

8Ps of marketing in China Developing and nurturing effective


partnerships is important in creating an
For the context of China, Partnerships effective marketing plan in China and yet
has been added to the traditional 7Ps it creates an extra layer of complexity.
traditionally used by marketing managers.
Researching and answering these
questions will allow UK companies to Key questions when considering
make informed decisions on the market creating partnerships:
and create a strategy covering all tenants
of the marketing mix. What type of partner are we looking
for in terms of their core capabilities
and business offering?

Have we ensured our intellectual


property is protected and undertaken
due diligence before we sign an
agreement with our new partner?

Is this an exclusive partnership, a


regionally specific or market-specific
one?

What suits our business best?


How many partners do we need?

2. Price
China has traditionally been a very
price-sensitive market and this is still
the case especially in the less affluent
regional cities. However, the growth of
the more affluent and aspirational middle
classes has created opportunities in niche
1. Partnerships markets where international companies
Both UK SMEs and large corporates can deliver premium products at a higher
that have been successful in China have price. Chinese consumers will accept
created long-term win-win relationships higher prices for trustworthy brands and
with local companies that have allowed high quality products.
them to understand the market better,
create a channel to customers and While pricing must reflect the quality and
gain the government and business attractiveness of any companys products,
relationships that are an important part it must also be attractive to Chinese
of creating open access to the market. consumers. As in all market pricing it will
be set based upon the perceived value
specific to the customers in that market.

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Naturally, marketers must take into Do we need to redesign or alter
account both their international competitors products for the needs or uses of
that can deliver high-value products and Chinese customers?
their new domestic competitors that
already have strong and entrenched Which of our competitors are in the
relationships within the market. market selling competing products?

Key questions when considering 4. People


pricing strategies: Understanding the nuances of the
Chinese market and Chinese consumers,
How does our new Chinese customer and balancing that with the strengths of
define value and how much are they your business, is going to be useful for
willing to pay for the product or service? your China strategy. For this reason,
many international companies choose
How are our international and domestic to hire local Chinese staff to assist in
competitors delivering value and pricing? creating and executing their marketing
Would it pay off to enter the market at plan in China. This way your company
a lower price point or will this can leverage the knowledge and relation-
negatively affect our brand image? ships of their local team, gain realtime
feedback on how the business is
What is the price structure our business developing and also deliver hands-on
can support, depending on our business relationship management with partner
model, and taking into account any companies within China.
extra costs associated with the supply
chain and getting the product to China? By using an incubator service, SMEs can
gain the benefits of having representation
in the market at a lower cost, but the team
3. Product must be managed effectively and
There are markets in China such as remotely from the UK.
Shanghai and Beijing that have become
crowded with a wealth of imported products
available to customers. It is therefore Key questions when considering
important that UK companies differentiate people strategies:
their product in these competitive markets,
which may involve customisation. Will investing in people either in the
UK or China create a better return on
Alternatively, some companies have investment for our business?
chosen to focus on less-competitive
areas of China. Regional cities in China How can we attract the right kind of
are developing strongly and represent quality people to work for our
areas of opportunity for UK companies company through providing training
who want to get their product in early. and opportunities?

How can we train, develop and


Key questions when considering supervise both our employees and
product strategies: partners to deliver consistently high
levels of service to customers?
How do customers in our market
niche define premium and what
aspect of our product is particularly
appealing to this market?

www.China.DoingBusinessGuide.co.uk 139
CHINA
Doing Business in China

5. Place marketing planning, the processes side


As mentioned in previous sections, it of the business cannot be overlooked
is helpful to view China as a country of as this will be the backbone of providing
many different markets rather than one consistently high levels of quality and
large market. One of the keys to success service to your clients.
for many businesses is researching and
understanding where to focus the com-
panys resources for maximum impact. Key questions when considering
processes:
Many successful SMEs focus on one
particular area to build deep relationships How can our company standards and
with partners and customers first. If they processes be applied to China and be
are new to market, they often test the implemented by our Chinese partners
viability of their product first on a small to maintain our brand image?
scale. Once confident that their products
resonate with the Chinese consumers What changes do we need to make
they then look to expand quickly. and how can we manage and
accommodate these changes?

Key questions when considering What partners can we use to ensure


strategy and plans for place: the efficient transport of our products
through customs to ensure timely
Which cities are our core target delivery to customers?
customers likely to be based in?

Is there a cluster of cities within that 7. Promotion


region that will allow our business to Focusing on a niche client and a core
expand without creating undue stress geographical area will help you create a
on our resources and supply chain? communications strategy that is effective
and manageable. The use of television
Where are our international and or other mass media for communications
domestic competitors based? is often regarded as expensive and not
targeted enough to be effective. Social
media is regarded as a very powerful tool;
6. Process however, a clear strategy needs to be
As businesses develop internationally created to create positive messages of
they need to understand how they can your brand and to manage any messages
expand their quality control and core that may be detrimental to your business
standards internationally too. This creates in China.
an extra layer of complexity working with
partners in a market as far away as China. Naturally, all communications need to
be translated into Mandarin and/or
While it is important to put your new Cantonese and managed in Mandarin
Chinese customer at the centre of your and/or Cantonese too.

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Although many young Chinese consumers Key questions when considering plans
speak English, if you are aiming to create for the physical environment:
a message that really has impact and
resonates with a Chinese audience it is Are there any specific weather or
often prudent to use Mandarin/Cantonese geographical considerations that
or a combination of these as well as English. affect our product or how it is used?
Be aware too, that although the written
characters may be the same (with simplified How does the physical environment
script in mainland China and traditional impact our supply chain and how can
script in Hong Kong and Taiwan), there we ensure that we can get products
may sometimes be a few localised words to our client in a timely manner?
or nuances too.

Technological change & social media


Key questions when considering
promotional strategies: The acceptance and usage of technology
and mobile devices in China has grown
Where would our Chinese consumer exponentially. According to the Foreign &
buy our products or hear about our Commonwealth Offices April 2013 China
brand? Country Update, China has the highest
total number of internet users in the world,
What types of social media, with nearly 600 million users (over 40% of
publications and exhibitions are the population), over 400 million of whom
specific to our target market use are mobile internet users.
and how can we integrate our
communications strategy to exploit The internet therefore has become a key
this? source for finding information on products
and services, communicating with
How do we develop or improve our communities of interest and engaging with
Chinese promotional materials? customers across China. Channels such
as Facebook and Twitter that Western
communities may be used to are not
8. Physical environment widely available in China; however, there
The northern part of China is extremely are Chinese equivalents such as Weibo
cold and the southern tip of Guangzhou and WeChat which are widely used with
is tropical, seasonal trends vary, lifestyles Chinese consumers.
vary and businesses operate and staff
work differently in many different ways. Chinese social media have become
The major cities are often congested with an important part of many companies
traffic and many major cities suffer from marketing communications and sales
environmental issues. It is important strategies in the China market.
therefore to ensure that your product is International marketers are keen to
relevant to the lives of those who live in engage with influencers within these
the area where it is going to be sold. social media communities to increase
awareness of their brands and
Physical promotional materials must communicate marketing messages.
also be prominent and remain in good
condition, whatever the physical
environment has in store.

www.China.DoingBusinessGuide.co.uk 141
CHINA
Doing Business in China

Some brands have done very well by Both Business-to-Consumer (B2C) and
using these platforms, and if these tools Consumer-to-Consumer (C2C) transactions
are utilised effectively, they can be a have seen a very recent and substantial
low-cost alternative to traditional advertising. jump in transaction volume, with B2C
e-tailing only maturing more recently.
Social media is an important tool when
a UK business promotes its products in Government Policy
China, and there are several reasons why In August 2013, the central government
even SMEs should consider embracing announced Broadband China, a new
social media in their marketing: strategic policy for increasing public
use of the internet. The main aims are
Cost efficiency: Registering a social to facilitate the construction of a new
media account costs nothing, but internet infrastructure, popularise online
companies can use it to respond to applications, enhance service innovation
consumers directly, promote products and assist in the coordination of
and build up a community. internet-related industries.

Enabling peer-to-peer dialogue: According to state media outlet Xinhua,


Social media allows companies by the end of the 12th Five Year Plan later
interact with consumers in a real-time this year (2015), the Broadband China
dialogue, which can increase brand strategy will have attracted RMB 1.6
loyalty. trillion (approx. 162 billion) of government
investments, and broadband internets
Bigger reach than email: Social prevalence is expected to increase by a
media encourages information- further 10%. This will provide a significant
sharing on the Internet. boost for Chinas e-commerce sector.

The Business-to-Consumer (B2C) /


E-commerce Online Retail Sector
The expansion of internet usership and
In 2008 China surpassed the US to have online shopping penetration rates has
the largest internet user base in the world, provided a solid foundation for the
and it now has the largest population of development of the Chinese online
online shoppers. There are now over 240 retail industry. According to the China
million Chinese e-shoppers, and together, E-Commerce Research Centre, in the first
they are spending an average of USD half of 2013 Chinese online retail market
$40,000 (approx. 25,000) every second. transactions topped RMB 754 billion
Online shopping in China is expected to (approx. 77 billion), accounting for 6.8%
see exponential growth over the next of total retail sales of consumer goods
five years. According to McKinsey Global an increase of 47.3% year-on-year (YoY).
Institute, by 2020 Chinas e-tail market Tmall is undoubtedly the No.1 in the
could be as large as todays markets in online retail market. However, in recent
the US, Japan, the UK, Germany and years its dominance has been challenged
France combined. by Jingdong (AKA 360Buy).

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The main reasons for the steady growth The Consumer-to-Consumer (C2C) Sector
of the Chinese B2C market since 2010 In previous years Chinas online C2C
are: sector, driven by amateur shopkeepers,
dominated the nations e-commerce
Mainstream B2C platforms have been market. However, the Chinese B2C
waging 'price wars' in order to e-commerce market is now growing
compete for market share rapidly and is providing tough competition.

Traditional enterprises have increased Due to the rise of the online B2C sector,
their online operations the total number of individual online C2C
shops has declined by 27.8%. This trend
The increase of online customers suggests that customers are becoming
increasingly concerned about quality and
As an internet-based industry, Chinese service and have higher expectations for
B2C companies have spent a lot of the online shopping experience.
resources in supply chain management
and they are also experienced in In the online C2C retail market, Taobao
front-end services. remains the strongest player, claiming
95.1% of the entire C2C market, leaving
Currently, price war remains the core only 4.7% to PaiPai.com and 0.2% to
competition model at this primary stage of Eachnet.com.
development in the Chinese B2C market.
However, in the future, the competition Business-to-Business (B2B) Sector
will focus on providing differentiated As of 2013, the value of Chinas B2B
products and services, not just pricing. e-commerce market transactions reached
approx. RMB 3.4 trillion (345 billion),
According to a 2012 survey of online an increase of 15% YoY. Among those
shoppers by Bain Analysis, an increasing B2B e-commerce service providers,
number of consumers are motivated to Alibaba.com continues to rank first
shop online by convenience and product in terms of revenue. According to
variety, rather than pricing. e-commerce specialists EBRun, Alibaba
has 43% of the market share, followed
Online-to-Offline (O2O) by MySteel.com, GlobalSources.com.cn,
Brick-and-mortar retailers are now HC360.com and Made-in-China.com.
developing strategies to direct shoppers
from the physical store into the online Mobile e-commerce
store and vice versa. According to a Chinese internet has witnessed a very
recent speech by Dr Yuanyue, founder of recent rapid increase in mobile
the Horizon Research Consultancy Group e-commerce. Chinas state media outlet
for durable consumer goods, Chinese Xinhua stated that in 2013 the size of
consumers prefer to compare the range, Chinas mobile e-commerce market
brands and product features online but reached RMB 53 billion (app. 5.4 billion),
eventually purchase the item in person. an increase of 44.1% YoY. As this statistic
This is especially in cases where high indicates, the momentum of this market
reliability and after-sales services are remains strong.
required.

Retailers need to improve online brand


awareness and both the online and
offline shopping experiences in order to
influence shoppers through multichannel
marketing and direct them back to high-
quality offline services.
www.China.DoingBusinessGuide.co.uk 143
The Skys the limit
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In the Chinese market, mobile registration and taxation information in
e-commerce is focused on retail, order to open a seller account. The actual
entertainment and personal finance operational cost of running such an online
needs. Compared with the other online store in China is often higher than
services, the data flow of mobile expected.
e-commerce contains more private
data and its business models are closer Another option is to set up a dedicated
to the inelastic demands of individuals. e-commerce access point for Chinese
target customers, which is physically
According to CNIT-Researchs report hosted outside of China (for example,
published in August 2013, the number Google chose Hong Kong to host its
of mobile e-commerce users in China at server clusters for Chinese visitors).
that time was as high as 370 million. This For British SMEs, hosting Chinese
figure had increased dramatically since content in the Asia-Pacific region means
2009, when there were just 36 million Chinese customers could get a faster
users. CNIT-Research estimated that connection, which is very important
users of mobile e-commerce will have in the e-commerce market. The latest
reached 500 million by the end of 2014*. cloud-based hosting services provide
reliable solutions at affordable prices.
The roll-out of 4G networks, with higher
connection speeds, combined with more Before entering the Chinese e-commerce
consumers switching to smart phones, market, it is important to understand
will further stimulate the growth of frequently changing government
mobile e-commerce. regulations and the local business
landscape. CBBC recommends UK
(* Although not necessarily all users of companies visit China to meet local
mobile e-commerce, in February 2015 partners and potential supporting staff.
there were about 1.29 billion mobile
users registered in China.) A good local partner can act as a sensor
of industrial trends and as a guide
Getting Access to Chinas Online to building business relationships.
Consumers In addition, the success of e-commerce
For British businesses trying to access activities is heavily dependent on pre-sale
the Chinese e-commerce market, the first consultation and post-sale support
step is to work out a practical and reliable services. A local partner would be in
e-commerce strategy. In the past, the only the best position to handle these issues.
way to directly handle the online shopping
demand from China was to establish
an online store in Chinese e-commerce
platforms, meaning that domestic
business registration and tax reporting
were essential.

Many SME producers of consumer goods


tend to use Amazon China as their first
step in China because Amazon China
provides the same management tools
and interface globally. However, Amazon
China has limited market influence and
low traffic compared to its competitor
Tmall.com. Moreover, Amazon China
requires a full set of domestic business

www.China.DoingBusinessGuide.co.uk 145
Top 10 Tips for Chinese E-Commerce

1. Know your friends, clients 5. Improve communication


and enemies with customers
Go through local stakeholders in your Ensure that you provide detailed
segment of the e-commerce industry. information through pre-sale
Unite partners, monitor competitors, communication and high-level
build networks, form partnerships services in post-sale support.
and/or acquire existing firms.
6. Do your research on local
2. Establish clear directions, combine business culture
online and offline development Integrate your business into the
Carefully plan your e-commerce Chinese e-commerce ecosystem.
strategy. In a multi-channel retail
environment, conflict between your 7. Catch up with the trend of
online and offline channels could mobile e-commerce
have a negative impact on your brand Carry out a usability assessment,
image. ensuring that your platform has a
well-designed interface for mobile
3. Choose the right platform for your internet users.
business
Existing platforms could increase 8. Understand government regulations
traffic and help with payment, Seek consultation relating to the
promotion and delivery issues. On the policies and regulations of your
other hand, having your own business sector.
e-commerce store could offer more
flexibility. 9. Never underestimate the importance
of logistics issues
4. Maintain an e-commerce workflow Investigate methods of maximising
of high efficiency the efficiency of the logistics process.
Once you have started your
e-commerce activities, maintain an 10. Keep innovating and keep up with
efficient workflow that includes e-commerce trends
information updates, product Any improvement in process
presentation and data analysis. optimisation and technical
enhancement could make a great
contribution to conversion rate and
revenue.

Source: UKTI and CBBC

Selling online to China

Watch CBBCs YouTube video on selling online to China at: www.youtube.com

Also UKTIs e-Exporting Programme can help you reach Chinese consumers through
e-marketplaces. See: www.gov.uk/e-exporting

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WHO ARE YOU?
WHY SHOULD I
CHOOSE YOU?
HOW CAN YOU
HELP ME?
WHAT DOES YOUR
COMPANY
STAND FOR?

ANSWER THE QUESTIONS WITH

Great
Communication www.ipa.co.uk
CHINA

The Chinese market can be more complex for uninitiated


companies than other international markets. The challenges
of a huge market with a different business culture and
language are compounded by a controlled currency and
relative newness of international trading in modern China.
CHALLENGES

www.China.DoingBusinessGuide.co.uk 151
CHINA
Doing Business in China

Challenges language barriers

The Chinese market can be more complex need for patience to build up trust
for uninitiated companies than other and networks
international markets. The challenges of
a huge market with a different business significant time difference
culture and language are compounded
by a controlled currency and relative weather extremes across the country
newness of international trading in and high levels of pollution in certain
modern China. urban centres

Whether buying, selling or investing, anti-monopoly legislation used


or whether dealing in physical products against foreign firms
or knowledge, it is important to be aware
of the complexities and risks. None are bribery and corruption
insurmountable, but they do require time
and resources.
Bureaucracy and red tape
The main points are covered below, and
there is a wealth of information on both Regulations and bureaucracy continue
the UK Trade & Investment and China- to be the predominant challenge
Britain Business Council websites: experienced by British companies in
www.gov.uk/government/organisations/uk China today. Although the issues raised
-trade-investment and www.cbbc.org. are highly sector-specific, numerous
British companies draw attention to
difficulties arising from the clarity
Challenges to doing business in China and transparency of the regulatory
environment in which they have to
There are some unique challenges when operate, the restrictiveness and
you are doing business in or with China. excessiveness of rules and red-tape
with which they have to comply, the
These include: frequency at which these rules and
regulations change, and the lack of
large parts of the economy are still predictability that all this causes.
closed to full foreign participation
Of course, many of these issues apply
strong competition from well- across the country, but because the
resourced and positioned state- implementation of regulations takes
owned enterprises place at a local level, this highlights the
importance of understanding how rules
finding and retaining the right skills and regulations are administered at a
in the local workforce provincial and municipal level in Chinas
regional cities.
complex business culture

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Intellectual Property Rights (IPR) The UKIPO and Chinas State Intellectual
Property Office (SIPO) signed a cooperation
China is a World Trade Organization agreement in 1996 covering patents and
(WTO) member. designs. The UKIPO signed a framework
for cooperation on trademarks with
It is essential to know how to use, guard Chinas State Administration for Industry
and enforce the rights you have over the & Commerce (SAIC) in 2009, and has
IP that you or your business own. UK operated a formal programme for
companies are increasingly indicating cooperation with the National Copyright
support on IP issues from local Chinese Administration of China (NCAC) since
authorities. However, it is still important to 2010.
consider the threat of IPR abuse of your
products or services. In addition, the UKIPO works with other
UK Government partners and Chinas
As part of your market entry strategy State Council Information Office to hold
you should: regular UK-China Internet Forums. These
events look specifically at issues which
establish how you can protect both China and the UK face in managing
your rights copyright on the internet, including peer-
to-peer file sharing and live streaming of
find out about costs sporting events.

monitor the market for possible The Foreign and Commonwealth Office
infringements (FCO) and UKIPO fund a number of
cooperation projects on important IP
China uses a first-to-file system for topics in China. These include online
trademarks. You may lose legal protection IP infringement, copyright enforcement,
if a similar mark has already been protection of geographical indications,
registered within China. Therefore, you IP in technology transfer and collaborative
must register your trademarks in China research, and facilitating exchanges
before entering the market. between IP judiciaries.

Read the UK Intellectual Property Offices IP Attach


(UKIPO) guides to IP in China. This 12- Since December 2011 the UKIPO has
page document can be downloaded at: based an attach in the British Embassy
www.gov.uk/government/publications/ in Beijing, working with representatives
intellectual-property-rights-in-china from UKTI and the FCO. The position is
central to the governments plans to
enhance trade relations and to support IP
Bilateral Cooperation and innovation-led businesses abroad.
The UK Intellectual Property Office
(UKIPO) has cooperation relationships
with a number of Chinese government
agencies working on IP.

www.China.DoingBusinessGuide.co.uk 153
CHINA
Doing Business in China

IP attachs provide a focal point in host Small transactions, such as the use of
countries for supporting UK businesses ATMs and credit cards, are straightforward,
with IP related issues, promoting UK but the controlled currency means that
Government interests and working with you need to be more careful in setting
local IP agencies. Attachs help to build up contracts and investing in the market.
relations with governments of host Company dividends may only be paid
countries to understand and actively annually, following audit of accounts by
engage with IP policy makers. an approved accountancy firm.

UK SMEs can also obtain free Contracts and payment


advice from an EU-funded project, As covered under the Business Culture
the China SME IPR Helpdesk via chapter, beginning on page 161, contracts
www.china-iprhelpdesk.eu. as operated in the UK are relatively new
in China. They are, however, essential for
Watch CBBCs webinars on 'Registration successful business there, for the same
and enforcement strategies for patents reasons as in any other market. They also
in China and Trade Marks in China' on ensure smooth transactions of payments
YouTube. through the Chinese banking system.
If payments do not match the contract
Source: UKTI March 2015 they may be delayed, or conversion into
foreign exchange may be blocked.

Getting paid and financial issues It is common for negotiation to continue


after a contract is signed in China, so it
Currency exchange and transfer of funds is wise to build into the final figure some
Many Chinese companies prefer to be provision for concessions. Substantial
invoiced in US dollars, particularly if additions to the contract need extra
they are already doing business with the care as, if they do not match the original
USA, although it is sometimes possible contract, payments may be held up
to negotiate contracts in euros or even in the banking system.
sterling. Conversion of the Chinese RMB
to foreign exchange is strictly controlled As elsewhere with large contracts involving
by the State Administration of Foreign stage payments, the final stage, which
Exchange (SAFE), a government often depends on sign off, may be
department, which regulates transfer difficult to realise, and this needs
through the banking system. This affects consideration when agreeing terms.
all financial transactions, from the ability
to purchase Chinese RMB before
travelling, to contractual payments
and dividends.

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When drawing up a contract with a If you are a first-time exporter to China,
Chinese organisation you should observe the standard method of receiving payment
the following: for your goods is by documentary letter
of credit.
Make it similar to other international
contracts, but be very explicit and The Chinese bank will make the payment
avoid legal jargon, which may not be provided that the requirements of the
understood. letter of credit are met. However, be
aware that a letter of credit is a form
Include an arbitration clause, as legal of contract between two banks. A bank
action can be very expensive and will make payment provided that the
difficult to pursue. documents submitted to it are in strict
compliance with the conditions of the
Take care with milestones and related letter of credit. This is regardless of
payments this is especially the purchase contract. To prevent the
important with royalties contracts, for possibility of a payment being made if
which payments can attract particular the terms of the purchase contract are
attention. not met, the seller should check the letter
of credit against the terms of the purchase
Agree and stipulate who is responsible contract, ensure that they match, and
for taxes. build in any necessary safeguards.

Agree and stipulate how agency Open Account and Bills for Collection
payments are to be handled. are other payment methods commonly
used between UK exporters and Chinese
Ensure the contract is fully under- importers when a trustworthy relationship
stood and agreed with the Chinese between the two parties has been
organisation. The contract should be developed. Major exports and those
accurately translated and both requiring long-term finance will require
versions signed. specialist payment and financing.

Consider the law applying to the Further information on securing payment


contract. Contracts under foreign law can be obtained from www.cbbc.org.
are permitted and may offer easier
prosecution in the ruling country if Pricing
something goes wrong, but this will Margins achievable in Chinese markets
need enforcement in a Chinese court. are likely to be lower than in Western
Contracts under Hong Kong law, ones. This situation is changing rapidly,
which is based on English law, may and increasingly Chinese companies are
be a suitable compromise. prepared to pay more for demonstrable
benefits, and it is occasionally possible to
command a premium for a unique product
Short-term finance or service.
When exporting to China normal
commercial rules should be followed, and
you should discuss the arrangements for
security of payment with the international
department of your UK bank, the UK
offices of Chinese banks or UK-based
banks that have offices in China.

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Insurance Contact UK Export Finance at:


www.gov.uk/government/organisations/uk
The private sector provides credit -export-finance
insurance for exports of consumer General enquiries:
products, raw materials and other similar enquiries@ukef.gsi.gov.uk
goods. Speak to your banker or insurance Tel: +44 (0)20 7271 8000
broker for more information or contact the
British Insurance Brokers Association for
impartial advice: Payment terms

www.biba.org.uk Key terms and conditions in an


Tel: +44 (0)870 950 1790 import contract
(Consumer Helpline); Chinese importers tend to use standard
Email: enquiries@biba.org.uk form contracts in their transactions.
Foreign contracts are seldom accepted
Private sector insurance has some for fear of being trapped by unfamiliar
limitations, particularly for sales of capital contract stipulations. Adding special
goods, major services and construction provisions to the contract form is normally
projects that require longer credit pack- acceptable.
ages or are in riskier markets. The UK
Export Finance (formerly Export Credits You can expect to see the following key
Guarantee Department, or ECGD), is a terms and conditions in a Chinese import
separate government department that contract:
reports to the Secretary of State for
Business, Innovation and Skills and Terms of price and shipment
provides a range of products for Chinese import businesses often
exporters of such goods and services: conduct transactions at Free on
Board (FOB) prices in consideration
UK Export Finance for using Chinese shipping companies.
UK Export Finance is the UKs export Cost and Freight (CFR) and Cost,
credit agency (formerly the Export Credits Insurance and Freight (CIF) terms are
Guarantee Department). As a government accepted only if the freight is proved
department that operates under an act of to be cost-effective.
parliament, they complement the private
market by providing government Insurance Chinese importers
assistance to exporters and investors, generally have open insurance for
principally in the form of insurance their import cargoes, i.e. importing
policies and guarantees on bank loans. companies submit notifications of
import cargo shipments and other
For more information, please see the relevant documents which are then
'Resources' section. acknowledged by the insurance
company as insurance orders, and
against which the insurance premium
will be settled with the insured.

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Terms of payment This is normally However, the general perception is that
by letter of credit (L/C). See the the situation is improving. Our advice to
Getting paid section for more companies encountering corruption is
information. simple dont get involved. Not only are
there issues of business integrity to bear
Inspection Certificates of quality, in mind, but it is also, of course, illegal.
quantity or weight issued by Invariably corruption is related to lack
manufacturers or public assessors of professionalism, transparency and
are normally required as part of the control, all of which are damaging to
process of setting up a letter of credit. long-term business.
However, if the goods are discovered
not to be in conformity with the The Chinese Government is keen to crack
certificates after re-inspection by down on corruption, and the penalties can
Chinese inspection authorities, the be severe. In addition, under the Anti-
buyer will either return the goods to Terrorism, Crime and Security Act 2001,
the seller or lodge claims against the UK companies and nationals can now be
seller for compensation on losses on prosecuted in the UK for acts of bribery
the strength of inspection at the port or other illegal activity committed wholly
of destination. overseas.

In the case of equipment imports, You should ensure you take the
Chinese companies often insert a clause necessary steps to comply with the
in the contract withholding a portion of the requirements of the UK Bribery Act. See:
payment normally 5 to 10% of the total www.gov.uk/government/publications/
contract value which will be paid only bribery-act-2010-guidance, where you
when the equipment is installed and can download the Bribery Act 2010
commissioned. This retention sum guidance.
tends to become a permanent rebate,
so beware of allowing too high a figure.

Dispute resolution In cases of


dispute, the formal contract has a
provision that a solution must be
sought through friendly consultation.
If this does not work, arbitration is
then adopted to settle the dispute.
Litigation is used only as a last resort.

Bribery and corruption

Anyone doing business in China is likely


to encounter or hear of corruption in one
form or another. Historically, practices
such as facilitation payments, bribes and
giving and receiving expensive gifts in
order to develop relationships were often
regarded as a part of doing business. This
is still the case in some areas, although
the problems vary according to sector,
type of business and region.

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Doing Business in China

Scams: How to avoid them The domain name scam A foreign


company receives an email from a
Fraudsters and scammers exist all over fictitious internet database company,
the world, and China is no exception. claiming a Chinese company has filed
There have been a number of instances a request to register your domain name,
of British and other foreign businesses and with a fee they can block that
being targeted by fraudulent companies request. Once you have parted with
and individuals operating from various the cash, the scammer disappears.
locations in China.
Watch the CBBCs recorded webinar
The most common scams are: on avoiding common scams when
doing business in China on YouTube.
The contract scam Fraudulent
companies in China make unsolicited Like any other market, operating in China
enquiries to foreign companies, poses certain risks. See the Foreign and
making orders in large quantities with Commonwealth Offices (FCO) Overseas
very beneficial financial terms. The Business Risk report for China at:
foreign company is often then invited www.gov.uk/government/publications/over
out to China to sign the contract. seas-business-risk-china
When they arrive, they are asked to
pay for expensive gifts or meals for
officials, in order to move things Too good to be true?
forward. When the foreign
representative flies back home the Once you know the basics, it's relatively
fraudsters vanish without trace. easy to prevent yourself from becoming
Companies should also be alerted a victim of scams. If you receive an
when they are asked to pay for any apparently very attractive order from
administration, notarisation or China (or indeed, anywhere else), or see
foreign exchange control charges. a website offering goods at unrealistically
low prices, ask yourself: is this too good
The visa invitation scam A fictitious to be true? If it looks too good to be true
Chinese company may randomly it almost always is.
request letters of invitation for visas
from UK organisations, so their Dont get on the plane, or send money,
delegates can visit the UK factory/site without seeking advice from either UKTI
with a view to developing business. or the CBBC, or carrying out appropriate
In reality these individuals have no due diligence checks. A guidance
interest in your company or your document on various business scams is
product they are looking for the available from the CBBC.
opportunity to enter the UK. If you are
approached by a Chinese company
in this manner, ensure that you carry Source UKTI
out basic due diligence checks before
issuing a letter of invitation.

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Building relationships is by some distance the best way


to overcome many of the obstacles to doing business
in China. In a highly competitive business environment,
it is more important than ever for us to understand the
business culture of our target markets.
BUSINESS CULTURE

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Doing Business in China

Business culture It also enables us to behave in an accept-


able way and avoid misunderstandings.
As the Chinese saying goes: ru jing sui su
Relationship building When you enter a region, follow its
customs.
The challenges associated with building
relationships and trust with local business However, knowledge of business culture
partners, clients and customers, and with especially in a country as vast as China,
government officials can be a challenging where sub-cultures and practices differ
aspect of doing business in China. While from place to place and where every
establishing a business presence in China Chinese person is an individual shaped
has become more straightforward in by different experiences must be
recent years the problems associated exercised with caution. A little knowledge
with identifying key contacts in partner, is dangerous, but do not worry if you find
client and government organisations, the complexities of Chinese business
establishing mutually beneficial and culture daunting.
trustful working relationships with them,
and developing meaningful channels of Just behaving modestly, patiently and
communication have now become more politely, while not suspending ones
pronounced. business judgement, is certain to provide
a good foundation for successful business
All of this does make it difficult for some in China.
firms, especially smaller ones, to build
their business in China. Again, an In China, getting to know someone face-
awareness of the particular conditions to-face is often regarded as the only way
offered by individual regional cities will of finding out whether a person is trust-
be needed if companies are to success- worthy. In general, the Chinese set great
fully build the relationships and contacts store on building personal relationships
required to effectively transfer their before entering into a business partner-
business model there. ship, often saying, Lets first become
friends, then do business.
Building relationships is by some distance
the best way to overcome many of the You can expect your first, and possibly
obstacles to doing business in China. In a your second, visit to China to achieve
highly competitive business environment, nothing other than getting to know several
it is more important than ever for us to possible candidates for business partner-
understand the business culture of our ships. This may seem a slow and costly
target markets. Understanding business way of getting started, but it is worth
culture helps us understand, anticipate remembering that taking time to cultivate
and respond to unexpected behaviour. personal connections as the Chinese do
is an excellent opportunity to get to know
the people you will be working with.

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Introductions via a trusted intermediary Guanxi
can play a valuable role in opening doors,
but there are no short cuts to relationship Both Chinese and foreign companies
building. will often attribute their business success
to having good guanxi.
You will undoubtedly encounter delays
and frustrations when doing business in The objective of developing close
China. Keeping your temper (equated in relationships is to build what the Chinese
Chinese terms with maintaining face), call guanxi (pronounced gwan shee),
even when things go wrong, can pay which are essentially social or business
disproportionate dividends. If you are not connections based on mutual interest and
sure what to do in any given situation, it benefit.
is best to err on the side of patience and
politeness. Do not be afraid to ask a In a centralised and bureaucratic state,
Chinese colleague for advice on how to reliance on personal contacts is often
handle matters. seen as the only way to get things done,
and in a place like China where the legal
Understanding and being responsive system is still relatively weak, the need
to the demands, requirements and to rely on guanxi remains strong.
perspectives of clients and government
agencies are fundamental to business In business, guanxi must be regarded as
success in China. You will need to be a two-way relationship. We are all familiar
patient, committed and flexible when with the expression You scratch my back,
dedicating managerial time and resources and Ill scratch yours, but in guanxi, the
to China and persistence, resilience, obligation does not cease with the second
realism, and attention to detail best scratch, and the other side will have
describe the managerial traits required! expectations that the relationship will
continue. It is not about making fair-
Westerners normally build transactions weather friends. If you expect guanxi to
and, if they are successful, a relationship deliver, relationships must be maintained
will ensue. However, the Chinese believe through regular contact.
that prospective business partners should
build a relationship and, if successful, Both Chinese and foreign companies will
commercial transactions will follow. often attribute their business success to
having good guanxi, but the obligations
This difference underlies many misunder- of guanxi are very real. In the wrong
standings arising from business place, at an inappropriate time, with
negotiations. Virtually all successful unsuitable people, the obligations can
transactions in China result from careful become a trap which is hard to escape.
cultivation of the Chinese partner by the
foreign one, until a relationship of trust
evolves.

www.China.DoingBusinessGuide.co.uk 163
The role of the State Stick to safe subjects such as
hobbies, family, your hometown,
It is easy to underestimate the role that the Chinese landscape and Chinese
the State continues to play in Chinese culture. The Chinese often ask
business. Despite the rapid expansion of apparently intrusive questions about
the private sector, many large Chinese your age, income or marital status.
businesses in strategic sectors remain These questions are not meant to
state-owned and, in addition, apparently offend, but if you dont want to
private firms also often turn out to have an answer, remain polite and give an
element of state control. The state factor unspecific response.
can have a significant influence on the
way a company does business, so you Avoid talking politics unless you know
should make yourself aware of the wider the person very well. Chinese people
political (in both the small and large are more nervous having political
p senses of the word) milieu that your debates openly. In any case, do not
Chinese partner or customer operates in. criticise China or Chinese leaders.
This knowledge will give you a greater Do not refer to Hong Kong as if it was
understanding of where the Chinese side still run by another administration or
is coming from. Taiwan or Tibet as separate entities.

On a related point, government officials It is fine to tell jokes in informal


such as city mayors and party secretaries situations, but they are best avoided
in China often wield far more power than when speaking to a group. Also, be
their counterparts in the UK do. Good aware that cross-cultural jokes are
personal relationships are key to success- hard to find, and often the point of a
ful business in China, and taking the time joke will be lost in translation.
to get to know key officials is likely to
make doing business much smoother. The Chinese do not like to say no.
Doing so causes embarrassment and
However, a change of local government loss of face. If a request cannot be
officials might affect the incentives or met, you might be told that it is
agreements offered by the previous inconvenient or under consideration.
administration. Officials are also Alternatively, you might be told Yes,
occasionally arrested for corruption. but it will be difficult. This might seem
like a positive response, but in reality
Having said that, most government means No or probably not.
officials particularly in the lesser-known
parts of China are really pleased to see Gestures in conversation can have
interest from the UK. different meanings in China. Nodding
means I hear what you are saying,
not necessarily I agree with you.
Making conversation Laughing can be from embarrassment
rather than because something is
Most people should be addressed by a funny.
title and their last name. You can address
people by professional titles such as
General Manager Wang or Director
Zhao or, alternatively, if a person does
not have a professional title, use Mr,
Madame or Miss, plus the last name.

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Entertainment between guests who cannot speak


each others languages. If in doubt
Work and social life tend to remain about the placement of your guests,
separate in the West, whereas much of a a friendly invitation for assistance
Chinese persons social life will be used when they arrive often solves the
to further personal and business relation- problem.
ships. In China some three-quarters of
business deals are sealed outside of It is traditional (but now less common)
working hours. Tea houses, Karaoke bars for the host to serve to the guest.
and restaurants can all be locations If you are the host and offer a guest a
where discussions and deals are made. second helping, do not automatically
take no for an answer. They may just
Banquets have traditionally been an be being polite.
essential part of doing business in China,
although the practice varies depending on It is polite to try a little of each dish if it
where you are and who you are dealing is offered to you. Otherwise, you can
with. Very senior people who have not discreetly leave any dishes that do
previously made an appearance may be not appeal to you if you finish them
present at a banquet. They may be key you are likely to be given further
to the approval of the business in hand helpings!
but be too senior to be involved in the
actual negotiations. The banquet is an Frequent toasts, to good health,
opportunity to impress them and get Sino-British friendship and so on are
a feel for how things are going. standard. Locally-produced wines or
baijiu (a strong spirit) are the usual
Most Chinese are unenthusiastic drinks for toasts. However, many
about Western food, and prefer people in China have a low capacity
Chinese food. Typical official for alcohol. If you host a meal, plenty
entertainment for a foreign visitor will of soft drinks should be available.
take the form of a banquet with
several courses, often consisting of Never arrive late for a Chinese meal.
exotic delicacies not usually eaten in It is common for people to arrive up to
the West or in China, for that 15 minutes early. They also tend to
matter! leave en-masse as soon as the last
dish has been eaten. Chinese hosts
If you are the host at a Chinese make it quite clear when the meeting
restaurant, at the customary round is over and you will not be expected
table, your seat should face the door, to linger.
with the Chinese guest of honour on
your right. Guests are seated further The Chinese eat earlier than we do.
away from the host in descending Lunch is served from 11.30am
order of seniority, with the most junior onwards, and dinner from about
having their back to the door. Thought 6.00pm. Most official banquets run
should be given to placing interpreters from 6.00pm to 8.00pm.

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Table manners are a matter of fitting Gift giving is influenced by hierarchy.
in. If in doubt, follow your hosts The most senior person should receive
example. One gaffe to avoid do not the most valuable gift. If other gifts are
leave your chopsticks pointing into the also given, they can be smaller and given
bowl, as this resembles an offering of to other members of the Chinese team.
incense to the ancestors or the
funerary flags on a recently dug If Invited to a private dinner, bring a gift
grave. Place them horizontally on the gift giving is part of Chinese culture,
rest provided. including at business meetings. If invited
to somebodys home for dinner, some
If you are invited to a banquet, it is fruit, for example, will suffice. Ideally, any
polite to reciprocate. A good time to gift should be presented in a gift box or a
have a return banquet is on the eve of gift bag. Do not be disappointed if your
your departure or at the conclusion of host doesnt immediately open it and
the business in hand. Many senior comment on its attractiveness/practicality.
officials in southern China are moving They may do so in private later to avoid
away from the typical banquet looking greedy.
scenario and are now more likely to
be found playing tennis (with a top Avoid gifts that bear negative connota-
coach) or golf. tions items which may raise eyebrows
include clocks (=death), red ink (=sever
Find out what form of entertainment your relations) or books (=losing).
key contacts prefer, as this can help you
decide how best to build your relationship
with them. Meetings

When arranging a meeting it is advisable


Gifts to provide the Chinese company in
advance with details of the objectives
The Chinese like to give gifts, which are of the meeting, names and ranks of
used to express friendship, the successful participants and specific areas of interest.
conclusion of an endeavour or appreciation Otherwise, it is likely that the Chinese
for a favour done. Often, the symbolic side will issue a long and general report
value of the gift is of more importance which is unlikely to provide you with the
than the material value. information you require.

It is a good idea to bring along small Business meetings start on time and
gifts for your hosts (souvenirs from your it is good practice to arrive at the
region, pens, ties, or a memento of your location early. Formal introductions
company). Wrap them in a colour are standard and it is usual to be
traditionally regarded as lucky, such as introduced to the most senior person
gold or red. It is not customary to open first, followed by the rest of the group
presents in front of the giver, unless in descending order of seniority.
encouraged to do so.

There are few rules on what gifts not to


give, but the Chinese expression To give
a clock sounds like the phrase for To
attend to a dying parent, so clocks are
not popular gifts. Similarly, cut flowers
are associated with funerals.

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There may be people from several Chinese green tea is normally offered
organisations present at the business at business meetings. This is usually
meeting. If it is not immediately served boiling hot in a porcelain mug
apparent who is the most senior with a lid. To avoid the tea leaves,
person in the room, it is a good idea which will sink eventually, blow them
to try to discover this by asking about out of the way or push them out of the
the relative roles of those present in way with the lid. The cup will be
the organisation and then to address refilled periodically, but there is no
remarks to that person. Another need to take more than a couple
pointer is that the person opposite of sips.
you at the meeting table will normally
be the most senior Chinese person
present. Presentations

Business cards are essential. At the Sophisticated PowerPoint and video


beginning of meetings where those presentations with multiple
present have not met before, it is illustrations are the norm for many
customary to exchange business forward-looking Chinese companies,
cards when being introduced. Its and it is advisable to take the same
advisable to take a good supply. approach to create a good
impression. Dual-language
It is a sign of courtesy to have your presentations and handouts in
card translated into Chinese, in Chinese are essential.
Simplified or Traditional text as
appropriate for the audience. Many Chinese audiences are often more
Chinese do not read English. interested in the cost-effectiveness of
the product rather than the product
Present your card with both hands itself. Therefore it is vital during the
with the Chinese side face up. Spend presentation to show how your
a few seconds examining the cards product can save money.
you receive. This shows respect for
the cards owner. However, whatever Chinese audiences also like to see
you do, dont write on the card, as this case studies of operational projects
shows disrespect to the owner. using your product, preferably in
China or a neighbouring country
When exchanging business cards, where conditions are similar. Client
greeting your Chinese counterparts lists featuring major players will create
with simple phrases such as Ni Hao good reference points for the Chinese
(hello), Zao Shang Hao (Good side.
morning) and Xia Wu Hao (Good
afternoon) can help to break the ice. Audience reactions vary. The Chinese
applaud themselves when they have
spoken, as well as clapping in
response to others, but do not be put

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off if your audience is extremely However, Chinese negotiators can move
passive. Throwing questions to the with lightning speed on other occasions
audience, inviting group discussion and exhaust Western business visitors
and asking for questions may not and local partners in consecutive midnight
elicit much reaction, although younger meetings when a deadline is looming.
participants are often more willing to
ask questions. Often, audiences are Chinese negotiators use time constraints
happier writing down their questions more strategically than their Western
rather than asking them in front of counterparts, who should be aware that
others. speedy conclusion of business can result
in extremely tight equipment/service
delivery dates.
Deal making
Another different approach to doing
Historically, China has witnessed foreign business is that in a buying decision
deal making which was not in the interests Westerners tend to look for clear
of the Chinese people. The period in the alternatives, while Easterners may
19th century where foreign powers forced examine ways to combine both options.
open the Chinese market and occupied
Chinese territory is still referred to as the For example, a Chinese panel may feel
Hundred Years of Shame. No wonder that a supplier who combines claims of
then, that China can be suspicious of best quality with a low price may either
foreign intent. raise the price during the contract or fail
to implement the contract. They will
Chinas recent re-emergence as an therefore often prefer to choose a supplier
economic power is accompanied by a whose price is neither the cheapest
great sense of national pride, and a desire nor the most expensive.
to be treated on equal terms. At the same
time, international issues and how they In addition, a Chinese panel may avoid
are reported in the Chinese press can awarding each supplier more than one
influence the mood of everyday contract, in order to minimise dependence
interactions with foreigners in China. on a single supplier. Such an approach
may make a Westerner think that a
Foreign technology and know-how are Chinese negotiator is being illogical,
highly respected, but the starting point evasive or devious, when he himself
for todays deal making can occasionally believes he is being quite straightforward.
carry some historical, political or cultural
baggage.
Negotiating techniques
Western business visitors are often
deadline-driven and unwilling to slow Mobilise local assets
down to the Chinese pace when The challenge of learning to speak
discussing business, but in China the Chinese fluently, the complexities of the
pace can be fast and slow simultaneously. Chinese way of doing business, and a
Those involved in negotiations know how strong sense of national pride mean that
long they can drag on when the Chinese a foreigner will only extremely rarely be
side is consulting internally or has other accepted by Chinese interlocutors on
reasons for delay. equal terms. The solution is to find a
reliable Chinese ally to work with you.

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An effective Chinese colleague will often Perversely, they often do not accord
be able to analyse body language at mainland Chinese or Hong Kong repre-
meetings, work out who in the other sentatives the same status as a foreigner.
negotiating team holds real power (not The ideal sales team, therefore, is often a
always the boss), and help smooth out Chinese to take care of the working level
any inadvertent wrinkles. contacts and a foreigner to do honour to
the higher echelons.

Face The pecking order


Mao Zedongs thoughts on discipline,
Face is an essential component of the published in 1966, provide a valuable
Chinese national psyche. Having face insight into structures which persist in
means having a high status in the eyes Chinese organisations even to this day:
of ones peers, and is a mark of personal
dignity. The Chinese are acutely sensitive The individual is subordinate to the
to gaining and maintaining face in all organisation. The minority is subordinate
aspects of social and business life. to the majority. The lower level is
subordinate to the higher level. This
Face is a prized commodity, which can quotation, which conforms with long-
be given, lost, taken away or earned. standing traditional social values,
Causing someone to lose face could indicates why Chinese society and
ruin business prospects or even invite companies are very hierarchically
recrimination. The easiest way to cause organised, and why Chinese people
someone to lose face is to insult an seem to be more group-orientated than
individual or criticise them in front of individualistic and often do not like to
others. Westerners can unintentionally take responsibility. Similarly, people are
offend Chinese people by making fun seldom willing to give an opinion before
of them in a good-natured way. Another their peers as it might cause loss of face
error can be to treat someone as a with a valued ally.
subordinate when their status in an
organisation is high. Just as face can Tricks of the trade
be lost, it can also be given by praising Chinese negotiators are shrewd and use
someone for good work before their a wide variety of bargaining tactics.
colleagues.
The following are just a few of the more
Giving face earns respect and loyalty, but common stratagems:
praise should be used sparingly. Over-use
suggests insincerity on the part of the giver. Controlling the meeting place and
schedule The Chinese know that
Conversely, the presence of a Westerner foreigners who have travelled all the
should be exploited to the full. Chinese way to China will be reluctant to
interlocutors will often see a visit by a journey home empty-handed. Putting
foreigner as an indication of sincerity and pressure on foreigners just before
commitment by the Western company. their scheduled return can often bring
useful benefits to the Chinese side.

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Threatening to do business elsewhere Cover every detail of a contract
Foreign negotiators may be before you sign it Talk over the
pressured into making concessions entire contract with the Chinese side.
when the Chinese side threatens to Be sure that your interpretations are
approach rival firms if their demands consistent and that everyone under-
are not met. stands their duties and obligations.

Using friendship to extract concessions Make sure that you get professional legal
Once both sides have met, the advice from someone who understands
Chinese side may remind the the law (and the language) under which
foreigners that true friends would the contract was written.
reach an agreement of maximum
mutual benefit. Make sure that the Be patient It is generally believed in
benefit is genuinely mutual and not China that Westerners are always in a
just one-way. hurry, and the Chinese party may try
to get you to sign an agreement
Showing anger Despite the before you have had adequate time to
Confucian aversion to displays of review the details. Possibly consider
anger, the Chinese side may put on having an Open Return flight.
a display of calculated anger to put
pressure on the foreign party, who Contracts Chinese and Westerners
may be afraid of losing the contract. often approach a deal from opposite
ends. To a Westerner, starting with a
Attrition Chinese negotiators are standard contract, altering it to fit the
patient and can stretch out different circumstances, and signing
discussions in order to wear their the revised version, seems straight-
interlocutors down. Excessive forward. Commercial law is ingrained
hospitality the evening before in our thinking, but traditionally,
discussions can be another variation commercial law scarcely existed
on this theme. in China and certainly indicated bad
faith. The early appearance of a
Counterplay draft legal contract was seen as
Here are some useful tactics that may inappropriate or, more likely,
help foreign negotiators dealing with the irrelevant, because it carried no sense
Chinese: of commitment. The business clauses
might form a useful agenda, but
Be absolutely prepared At least one obligations came from relationships,
member of the foreign team must not pieces of paper.
have a thorough knowledge of every
aspect of the business deal. Be Nowadays, business contracts are
prepared to give a lengthy and accepted as the norm. But returning
detailed presentation, taking care not home with a signed piece of paper is not
to release sensitive technological the end of the matter. It is not unknown for
information before you reach full the Chinese side to view a contract as a
agreement. snapshot of an agreement that was made
at a particular time, and under particular
Be willing to cut your losses and go circumstances. Further concessions may
home Let the Chinese side know then be requested a difficult prospect for
that failure to agree is an acceptable the Westerner who has shaved his margin
alternative to making a bad deal. down to the bone.

www.China.DoingBusinessGuide.co.uk 171
CHINA
Doing Business in China

Visas for the UK The concept of 'hosting'

The UK visa service has been The Chinese take the concept of being
complimented by major Chinese investors host (and you being in the role of a guest)
such as Huawei for its efficiency. Biometric very seriously. Companies doing business
data (fingerprints and photographs) is in China are often treated to a wide range
now required for all visa applications of assistance, including hotels, transport,
and this can be done at Visa Application meals and evening entertainment.
Centres across China. Full details on the
visa application process can be found at: Chinese companies can often lean on
www.vfs-uk-cn.com an extensive network of relationships
to provide these without incurring direct
While the majority of visas are granted, costs, or at a substantial discount.
some common problems arise which may
prevent or delay the granting of visas to Inviting the Chinese side for a return
the UK. Some Chinese companies may visit to your company in the UK will
rely on local agents for advice, rather than demonstrate your intent to reciprocate
the Embassy website (www.uk.cn). The the hospitality of the Chinese side, and
quality of these agents varies and they will also strengthen the relationship.
are often more of a hindrance than a However, when they are visiting the UK
help; recommend your visitors use official Chinese companies expect the same
channels. On top of this, assistants or assistance, and most UK companies do
secretaries may miss or incorrectly enter not have the budget to handle two weeks
vital information, so forms should be of all-in travel for contacts they have
checked personally by the applicant. never done business with and are not
sure they ever will do business with.
If assistants or colleagues are also
applying, a cover letter to the visa section Therefore, it is best to be cautious about
explaining that the applications are linked the extent to which hospitality is expected.
can help. Finally, visitors should allow
plenty of time for their application, Dont be rude, but do take the trouble
especially if they require several visas to explain that things are different in the
to visit multiple destinations. UK. However, showing you care is not
expensive. Making sure your visitors are
greeted at the airport and making an effort
to see them off when they leave is seen
as basic hospitality in China. Organising
some sightseeing or shopping for your
guests and treating them to a meal in a
good Chinese restaurant will also be well
received.

Visit the Website and download the free Mobile App


Basic Mandarin Whereas in Hong Kong and parts of
Guangdong Province Cantonese is
The written language is uniform more widely spoken, Putonghua is still
throughout China*, however, as in any generally understood. There are
other country, Chinese dialects vary from numerous free-to-access websites
region to region. The standard language, designed to help you learn Putonghua
Putonghua (often called Mandarin), is (and Cantonese), and some simple
based on the Beijing dialect and is spoken phrases are below.
by most people across the country. This is
the language of business in China and if *Hong Kong and Taiwan use traditional
you would like to learn some Chinese, Chinese script whereas mainland China
Putonghua is the language to study. uses a simplified version

Source UKTI

www.China.DoingBusinessGuide.co.uk 173
Zhonglun W&D Law Firm
About Foreign Investments

Zhonglun W&D Law Firm is a large-scale, Zhonglun W&D Law Firm has been
comprehensive law firm with approxi- continuously dedicated to facilitate
mately five hundred lawyers and legal business endeavors in China. Since our
employees; we are based in Beijing, and establishment in 1992, we have ventured
co-function with seventeen branch offices and thrived in bridging the legal gap
in major cities in Greater China, Europe between foreign investors and Chinese
and Middle East. We provide legal business opportunities. With our expertise
services in Chinese, English, French, and professional integrity, we serve to
Korean, Japanese and Arabic. introduce foreign capital to local business
from a legal perspective, to further our
Our practice ranges from traditional areas clients understanding of the investment
like corporate finance, capital market, environment in China, and most importantly,
real estate and construction, intellectual to facilitate the legal procedure of cross-
property and informational technology, border business transactions on our
international investment and trade, clients stead.
litigation and arbitration, to emerging
areas such as private equity, growth The firm manages equity transfer and
enterprises market and real estate acquisition, legal procedures for joint
investment trusts. venture company projects; and conducts
legal due diligence, structured investment
Our professional team strives to provide design, and legal documents drafting for
qualitied and effective legal solutions to foreign clients launched on the Chinese
clients ranging from multi-national market. In 2013, we consulted Capitaland
companies, governmental institutions, Retail Investment on state-owned assets
foreign embassies and consulates, to transfer and foreign investment acquisition
rising SMEs and start-ups. We practice regarding its acquisition project in China;
with the highest standard in the industry, the deal concerned over two hundred
and aim to build enduring business million yuan.
relationship with our clients.
We provide legal consultation, and
litigation and arbitration services to secure
the business well-being for our foreign
clients, particularly with laws concerning
financial institutions and intellectual
property. Our clients range from leading
commercial and investment banks like
Barclays, NatWest, RBS and J. P. Morgan,
to business enterprises, individuals and
NGOs like Victoria Secret, Lotte Group,
J. K. Rowling, and WSPA.
Zhonglun W&D Law Firm has devoted its Should you inquire further information
professional and research resources to please do not hesitate to contact:
promote foreign investment in China. We
organize, and invite our business partners Mr. Zheng (Bill) Li
from abroad to attend discussion panels, Senior Partner, Lawyer
forums and speeches to keep abreast Zhonglun W&D Law Firm
with current affairs in the area. We have
also established a Foreign Investment Address:
and M&A Practice Committee among our 19th Floor,
twenty-six special committees to further Golden Tower,
streamline our service in foreign No. 1 Xibahe Road
investments. This committee consists Chaoyang District,
of partners and lawyers who received Beijing, China 100028
education and credentials from legal
institutions overseas, and are well Cell: 13911768721
experienced in foreign investment and Tel: +86-10-6440 2232
M&A practice. Our clients benefit from Direct Line: +86-10-6440 2893
our enduring partnership with regulatory Fax: +86-10-6440 2915
authorities and intermediary organs, as Email: lizheng@zlwd.com
well as our cross-sector specialty in Web: www.zhonglunwende.com
foreign exchange, finance and taxation.

We highly value our business partnership


with foreign investors, and firmly believe
in the potential opening-up of the Chinese 1
market. We are a member of Interlaw and 19 100028
Integrated Advisory Group. We received
recommendations from influential legal 13911768721
media such as Legal500, Chambers & +86-10-6440 2232
Partners, and Asia Law & Practice; and +86-10-6440 2893
have been continuously listed among +86-10-6440 2915
Chinas 20 Largest Law Firms by Asian lizheng@zlwd.com
Law & Business and Top 10 Chinese www.zhonglunwende.com
Growth Law Firms by Asian Legal
Business.
in association with
CHINA

In 2014 the imported food market in China was


valued at 500 billion USD. This shows that China
offers a huge potential to UK companies of all
sizes who can offer high quality products.
SELLING FOOD TO CHINA

www.China.DoingBusinessGuide.co.uk 177
CHINA
Doing Business in China

Selling food to China

Why China?

In recent years, China has introduced over


20,000 types of imported food from over
60 different countries. This covers a wide
variety of products such as dairy, bottled
water, biscuits, snack foods, sugar,
chocolates and confectionary, beverages
such as coffee and tea, meat and even
rice. The result of this is that over the last
6 years the market for imported food has
grown annually at a rate of approximately
15%, compared with the worldwide
average of around 4%.

In 2014 the imported food market in China


was valued at 500 billion USD. This shows
that China offers a huge potential to UK
companies of all sizes who can offer
high quality products.
Will your Product find a market?
However, at the same time China is a
highly competitive place. A growing market
The first thing to consider is if China is a
attracts a lot of interest from all over the
market for your products. This is relatively
world and China has, over the last year,
straightforward and requires some basic
developed a tough regime on food safety
market research, but also remember that
and other compliance issues. This means
there is a thirst for new experiences
to be successful companies need to be
amongst the rapidly growing middle class,
prepared to do what it takes to win
who are prepared to pay more for food
business by being persistent yet patient
from what are seen as reliable and safe
and also needs a significant investment
sources. A product that is not already in
of resource.
the market may simply be the next big
thing waiting to take off. Once you decide
that China is the place for you, then you
need to develop a workable strategy and
make your product market ready.

Visit the Website and download the free Mobile App


Opening the doors to
doing business
in China

First things first Market readiness You get an approved label to be attached
to the product and also details on the time
Market readiness is vital if you are to scales involved and the associated costs.
succeed and is, initially, based around You are then ensured that your product
compliance issues. These appear to meets all the requirements, meaning that
be highly complex and ever changing. it can be easily imported.
As soon as you begin to look at regulation
it quickly becomes apparent that the food Obviously going through the regulatory
industry requires a dependable intermediary compliance carries a significant cost,
to interpret Chinas complex regulations, but should be viewed as an essential
registration projects and ultimately remove investment, simply because nowadays
the regulatory barriers preventing enter- serious Chinese dealers will no longer
prises accessing China's markets. A recent take the risk of placing even sample orders
BCC review showed that for SMEs one if this has not been done. Any effort you
of the biggest barriers export trade is put into selling into the market without
regulation but it doesnt have to be compliance could easily be a waste of
that way. time and money.

Anderen with their partner Chemlinked,


have great connections with the various
Chinese Government Offices, AQIQS
who deal with testing and Customs
Offices.

Anderen's team is a multidisciplinary team


composed of food technologists, toxicolo-
gists, nutritionists, chemists, regulatory
analysts and language experts with vast
insight and practical experience dealing
with Chinese regulatory obligations and is
managed by senior regulatory compliance
experts. You get a comprehensive pack-
age dealing with compliance for all food
types. They make it as simple for you as
possible. You provide details of the product
you want to offer and get a list of what
you need to provide in the way of
documentation, product specifications,
samples for testing and any other
specific compliance requirements.

www.China.DoingBusinessGuide.co.uk 179
CHINA
Doing Business in China

Here is part of a typical compliance menu showing some of the many (but not all) steps that
need to be dealt with for various food types, as you can see this can be quite complex. Many
of these documents will actually already be familiar to you as they apply to exports in general:

CIQ inspection and Customs clearance

Items Legal basis

Customs declaration Food Safety Law


and commodity inspection
Law of Import and Export Commodity Inspection of the
Peoples Republic of China

Measures for Safety Administration of Imported &


Exported Foods (No. 144 Order of AQSIQ)

Regulations on Supervision and Administration of


Imported & Exported Prepackaged Food Label Inspection
(No. 27 (2012) Announcement of AQSIQ)

Administrative Measures for Inspection and Quarantine


of Imported & Exported Dairy Products
(No. 152 Order of AQSIQ)

Announcement on Regulating Health Certificate


Management of Imported Dairy Products
(No. 125 (2009) Announcement of AQSIQ)

Notice on Further Strengthening the Inspection and


Supervision of Imported Edible Vegetable Oil
(GUO ZHI JIAN SHI HAN [2012] No. 229)

Supplementary Notice on Supervision of Imported Edible


Vegetable Oil (ZHI JIAN SHI HAN [2012] No. 493)

Other regulations released by national administrative


departments

Competent department: AQSIQ

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Documents need to be submitted by the client

No. Name of document

All kinds of foods Letter of authorisation of customs declaration and commodity


inspection service for imported foods (see Appendix 1)

All kinds of foods Necessary documents including contract, invoice, packing


list, and bill of lading

Prepackaged foods for Original label and translated version, Chinese label, copies of
first-time import the business license of importers, distributors or agents listed
in the label, relevant evidentiary materials for the awards,
certificates, legal producing area, geographical indication,
special ingredients contained in the product, etc. that are
emphasised in the label, conformance evidentiary materials
for the nutritional ingredients content marked on the label

Prepackaged foods not Certificate of label filing, label samples both in English
imported for the first time and Chinese (it will be deemed as first-time import
without the certificate of label filing.)

First-time imported foods License files issued by NHFPC


without food safety national
standard

Dairy products Health certificate issued by the authority of exporting


country (template:
http://jckspaqj.aqsiq.gov.cn/ybzspjyjy/ggshrzpzsyb/)

Fresh milk Certificate for Quarantine Examination and Approval of


Entry Animals and Plants

Dairy products imported for The testing report listed in food safety national standard
the first time

Dairy products not imported Copies of the testing report of first-time import, and the
for the first time testing report of the items required by AQSIQ

Health food Approval Certificate for Imported Health Food released


by NHFPC

Wines Certificate of Origin

Prepackaged edible vegetable Testing report of the items required in relevant food safety
oil imported for the first time national standard

Prepackaged edible vegetable Copies of the testing report of first-time import, and the
oil not imported for the first time testing report of the items after importer risk analysis and
designated by inspection and quarantine institutions

Others Other documents needed to be submitted

www.China.DoingBusinessGuide.co.uk 181
CHINA
Doing Business in China

In addition to compliance and labelling, it Just like the EU the various regions
is a good idea to register your trademark/ of China have their own identity and
brand in China. Whilst many companies requirements and as such you will need
assume that their trademark is registered to develop a dealer network. Having your
worldwide, it needs to be specifically own office in China is a great help, but
registered in the Chinese market. It is also ultimately your success in the market will
a good idea to have a Chinese version of depend on the strength of your dealer
your trademark/brand. network. There are few if any dealers
who can truly cover the whole of China
In China the Government operates a first no matter what they may say. The vast
to file system which means that anyone majority will cover their home city,
can file a trademark and then, if it happens (remember many Chinese cities have
to be yours, can block you from using it in populations running into millions of
China. The cost of registering is modest people). Some will cover their home
compared with the cost of trying to buy province, but few will really have the
your trademark back from anyone who ability to cover China as a whole.
has beaten you to it.
Also you need to consider if you will
That all said, there is a kudos attached to actually Do China. Having a single dealer
maintaining the product identity as being in say, Guangzhou, is no more doing
from the UK, simply because in China, UK China than having a single dealer in, say,
products are seen as being of high quality Paris means that you are doing Europe.
and are safe. As a result they can The best and most economic approach is
command a premium price. to find a good place to start and then once
that region is developed and you have
some brand identity, you can then start
Routes to Market to expand. This is where having an under-
standing of the various regions is helpful.
So you have a product that has been We based ourselves in Guangzhou (Canton)
approved and has a Chinese label and a and believe it makes the ideal stepping-off
registered brand Congratulations, you point for your China adventure.
are market ready! Now you need to look
at developing a distribution network and
creating brand awareness. Why Guangzhou?

Finding routes to market in China is a Along with Beijing and Shanghai,


potential minefield. We often hear people Guangzhou is one of Chinas main first
exhibiting at shows with the intention of tier cities. It is the administration centre
getting a Chinese Agent. for Guangdong Province which is, without
doubt, the wealthiest area of China with
Remember that China is a big country a GDP of over 1 trillion USD.
the size and complexity of Europe. Ask
yourself if it makes sense to have a single For imported food, the annual value
European Agent to cover the whole of the EU. of purchases in Guangzhou alone is in

Visit the Website and download the free Mobile App


excess of 1 billion USD per year with an
annual growth in excess of 10%. Created
by the growth of the more affluent middle Claim your free guide now!
class, who are able and prepared to pay
higher prices for what is seen as higher
quality food produce. This is also a sector
which is experimental and desires new
food experiences.

Guangzhou is also home to Chinas main


exhibition centre at Pazhou which hosts
the world famous Canton Fair. This means
that it has a brilliant infrastructure and is
also a place where companies from all
over China will have a presence. Figures
show that over 42% of food buyers in China
are based in the South, with Guangzhou
being the main city.

The city has good links internationally via


the Baiyun International Airport, serviced
by many of the worlds leading airlines and
also has a number of ports based on the
Pearl River. UK office:
Anderen Ltd, 85 Blurton Road
For 2014, Forbes rated Guangzhou as the Stoke-on-Trent ST3 2BS UK
leading commercial city in China. Shenzhen,
which is about an hour away, and so in Telephone number: +44 (0)1782 326027
easy travelling distance, is rated number
2 with Shanghai at 3. This is interesting China office:
because invariably when people in the Anderen Ltd (China)
UK think China, they think Shanghai and Level 54, Guangzhou IFC
neglect Guangzhou. Guangzhou, unlike No.5, Zhujiang Road West
Shanghai, has the geographical ability to Guangzhou 510623 China
grow as a city something that Shanghai
cant do. This is important because the Telephone number: +86 20 2801 6129
potential catchment area, within a 1 hour
travel radius, is heading for 120 million Email Address: info@china-trading.co.uk
people.
Websites:
Another interesting fact is that Guangzhou www.china-trading.co.uk
has one of the highest average salary www.ceramictestingequipment.co.uk
rates in China - this means that it has
an increasing aspirational middle class.

www.China.DoingBusinessGuide.co.uk 183
CHINA
Doing Business in China

So how do I get my product in front of buyers?

Food exhibitions are a good place to start in China there is a food exhibition somewhere
every week, and so you need to take a strategic approach. In Guangzhou, we recommend
the Food and Hospitality World Exhibition (FHW) which takes place in September each year.
FHW is in fact, an international franchise and operates shows throughout the BRICS countries.
Anderen Ltd offer a fully managed package which includes space, stand-building, provision
of trained interpreters, translation of literature and event management. They can also help to
bring samples into the show, even if they are not yet compliant, through a legitimate exclusion
system, making it as easy as possible to exhibit.

New for this year is the Food2China web portal (www.food2china.com).The internet is now a
vital tool for engaging with both B2B and B2C in China. Trade on the internet in China is growing
at a phenomenal rate, you simply have to have an internet presence, ideally in Chinese.

Source Anderen Ltd

Visit the Website and download the free Mobile App


Resources:

The Institute of Export


Export House
Minerva Business Park
Lynch Wood
Peterborough
PE2 6FT, UK
Tel: +44 (0) 1733 404400
Website: www.export.org.uk

UK Export Finance is the UKs export credit agency, serving UK companies of all sizes.

We help by providing insurance to exporters and guarantees to banks to share the risks of
providing export finance. In addition, we can make loans to overseas buyers of goods and
services from the UK.

In the past five years, we have provided: UK Export Finance is the operating
name of the Export Credits Guarantee
14 billion worth of support for UK Department (ECGD).
exports;
For more information and to arrange
direct support for more than 300 a free consultation with an Export
customers supported directly, with Finance Adviser, visit:
many thousands more benefiting www.gov.uk/making-exports-happen
through export supply chains;
New business enquiries:
nearly 2000 individual guarantees, Telephone: +44 (0)20 7271 8010
loans or insurance policies. Email: customer.service@ukef.gsi.gov.uk

www.China.DoingBusinessGuide.co.uk 185
CHINA

UK Trade & Investment British Consulate-General Hong Kong


www.gov.uk/ukti 1 Supreme Court Road
Admiralty
UK Trade & Investment Enquiry Service Hong Kong
Tel: +44 (0)20 7215 8000 Tel: +852 2901 3182
Email: enquiries@ukti.gsi.gov.uk Email: commercial@bcg.org.hk

British Trade & Cultural Office Taiwan


British Diplomatic Posts (BTCO)
26F, President International Tower
in China: No. 9-11, Song Gao Road
www.gov.uk/government/world/china Xin Yin District
Taipei 11073
British Embassy Beijing Taiwan
11 Guang Hua Lu Tel: +886 (2) 8758 2088
Jian Guo Men Wai Fax: +886 (2) 8758 2050
Beijing 100600
Tel: +86 (0)10 5192 4000
Fax: +86 (0)10 5192 4218/4441 China-Britain Business
British Consulate-General Shanghai Council (CBBC)
The British Centre www.cbbc.org / www.britishchamber.cn
17F Garden Square
968 West Beijing Road CBBC London
Shanghai 200041 3rd Floor
Tel: +86 (0) 21 3279 2000 Portland House
Fax: +86 (0) 21 6279 7388 Bressenden Place
London
British Consulate-General Guangzhou SW1E 5BH
7/F Guangdong International Hotel Tel: +44 (0)20 7802 2000
339 Huanshi Dong Lu Fax: +44 (0)20 7802 2029
Guangzhou 510098 Email: enquiries@cbbc.org
Tel: +86 (0)20 8314 3000
Fax: +86 (0)20 8333 6485 CBBC South East
C/O 3rd Floor
British Consulate-General Chongqing Portland House
28/F Metropolitan Tower, Zourong Road Bressenden Place
Yu Zhong District London
Chongqing 400010 SW1E 5BH
Tel: +86 (0)23 6369 1500 Tel: (0)20 7802 2018
Fax: +86 (0)23 6369 1525

Visit the Website and download the free Mobile App


Doing Business in China

CBBC South West CBBC Yorkshire & Humber


UK Trade & Investment 2nd Floor
Leigh Court Business Centre Elizabeth House
Abbots Leigh 13-19 Queen Street
Bristol Leeds LS1 2TW
BS8 3RA Tel: +44 (0)113 247 1584
Tel: +44 (0) 7984 175 318 Fax: +44 (0)113 247 1111

CBBC East
C/O 3rd Floor CBBC North East
Portland House C/O 3rd Floor
Bressenden Place Portland House
London Bressenden Place
SW1E 5BH London SW1E 5BH
Tel: +44 (0)178 731 0245 Tel: +44 (0)1484 325 320
Fax: +44 (0)20 7802 2029
CBBC Wales
CBBC West Midlands C/O South Wales Chamber of Commerce
C/O 3rd Floor Orion Suite
Portland House Enterprise Way
Bressenden Place Newport NP20 2AQ
London Tel: +44 (0)1633 242 724
SW1E 5BH Email: wales@cbbc.org
Tel: +44(0)1788 570 929
CBBC Scotland - Edinburgh
CBBC East Midlands C/O Edinburgh Centre for Carbon Innovation
The International Trade Centre High School Yards
Innovation House Edinburgh EH1 1LZ
Riverside Park Tel: +44 (0)7931 880 934
Raynesway
Derby DE21 7BF CBBC Scotland - Glasgow
Tel: +44 (0)845 052 4001 1st Floor
Fax: +44 (0)20 7802 2029 30 George Square
Glasgow G2 1EQ
CBBC North West - Manchester Tel: +44 (0)141 204 8322
Churchgate House Fax: +44 (0)141 204 8354
56 Oxford Street
Manchester M60 7HJ
Tel: +44 (0) 161 237 4247

CBBC North West - Liverpool


No. 1 Old Hall Street
Liverpool L3 9HG
Tel: +44 (0)151 227 1234

www.China.DoingBusinessGuide.co.uk 187
CHINA

CBBC Northern Ireland CBBC Chengdu


C/O 3rd Floor 2308, 23/F
Portland House The British Centre
Bressenden Place China Resources Building
London SW1E 5BH No.10, Shuangqing Road
Tel: +44 (0)1484 325 320 Chengdu 610067
Fax: +44 (0)20 7802 2029 Tel: +86 (0)28 8665 6302
Fax: +86 (0)28 8665 7296
CBBC China
CBBC Beijing CBBC Chongqing
The British Centre 715 Creative Center
Room 1001 No.388 Xinhua Road
China Life Tower Yuzhong District
16 Chaoyangmenwai Avenue Chongqing 400010
Beijing 100020 Tel: +86 23 6380 8670
Tel: +86 (0)10 8525 1111 Fax: +86 23 6380 8879
Fax: +86 (0)10 8525 1001

CBBC Shenyang CBBC Nanjing


Room 901 Rm 2514-2515
Tower 2 No. 50 Zhong Hua Road
Shenyang City Plaza Nanjing 210001
No.206 Nanjing North Street Tel: +86 (0)25 5231 1740
Heping District Fax: +86 (0)25 5223 3773
Shenyang 110001
Tel: +86 (0)24 2334 1600 CBBC Shanghai
Fax: +86 (0)24 2334 1858 The British Centre
Unit 1708, Garden Square
CBBC Xi'an 968 West Beijing Road
802A Shanghai 200040
Capital Malls Tel: +86 (0)21 3100 7900
No. 64 West Section of South 2nd Ring Fax: +86 (0)21 6229 0001
Road
Xian CBBC Hangzhou
Shanxi 710065 Room 506
Tel: +86 (0)29 8535 7875 Xihu Minglou Building
Fax: +86 (0)29 8535 7876 No.296, Qingchun Road
Hangzhou
CBBC Qingdao Zhejiang 310003
Room A-2603 Tel: +86 (0)571 8763 1069
Yihe International Plaza Fax: +86 (0)571 8763 0961
10 Hong Kong Middle Road
Qingdao 266071
Tel: +86 (0)532 8386 9772
Fax: +86 (0)532 6688 8151

Visit the Website and download the free Mobile App


Doing Business in China

CBBC Wuhan Useful Links


Room 1203
Tower A Country Information
New World International Trade Center
568 Jianshe Avenue BBC Website:
Wuhan 430022 www.news.bbc.co.uk/1/hi/country_
Tel: +86 27 8577 0082 profiles/default.stm
Fax: +86 27 8577 0991
FCO Country Profile:
CBBC Changsha www.fco.gov.uk/en/travel-and-living-
Room 1103 abroad/travel-advice-by-country/country-
Cyber Times profile/
No. 456 Wuyi Road
Changsha Culture and communications
Hunan 410011
Tel: +86 (0)731 8228 1511 CILT National Centre for Languages -
Fax: +86 (0)731 8228 1511 Regional Language Network in your area:
www.cilt.org.uk/workplace/employer_
CBBC Guangzhou support/in_your_area.aspx
The British Business Centre
Unit 22-01B Customs & Regulations
International Finance Centre (IFC)
5 Zhujiang West Road HM Revenue & Customs:
Guangzhou 510623 www.hmrc.gov.uk
Tel: +86 20 8883 2120
Fax: +86 20 8331 2120 Economic Information

CBBC Shenzhen The Economist:


Room 1121, Tower A www.economist.com/countries
International Chamber of Commerce
Fuhua Yi Lu Trading Economics:
Futian District www.tradingeconomics.com
Shenzhen 518048
Tel: +86 (0)755 8293 1247 Export Control

Source UKTI / CBBC Export Control Organisation:


www.gov.uk/beginners-guide-to-export-
controls

Export Finance and Insurance


British Insurance Brokers Association
(BIBA): www.biba.org.uk

www.China.DoingBusinessGuide.co.uk 189
CHINA
Doing Business in China

EU SME Centre: Travel Advice


www.eusmecentre.org.cn/guideline/china- FCO Travel:
enterprise-income-tax www.gov.uk/browse/abroad

Intellectual Property Healthcare abroad

China IPR SME Helpdesk: Travel health:


www.china-iprhelpdesk.eu www.travelhealth.co.uk

Intellectual Property Office:


www.ipo.gov.uk International Trade

Market Access British Chamber of Commerce (BCC):


www.britcham.org.uk
Market Access Database for Tariffs:
www.madb.europa.eu/madb/indexPubli.htm British Chamber of Commerce in China:
www.britishchamber.cn
Standards and Technical Regulations www.cbbc.org

British Standards Institution (BSI): Gov.uk: www.gov.uk/browse/business/


www.bsigroup.com/en/sectorsandser- imports-exports
vices/Disciplines/ImportExport
Institute of Export: www.export.org.uk
Intellectual Property Office:
www.ipo.gov.uk OECD: www.oecd-ilibrary.org

National Physical Laboratory: Open to Export: opentoexport.com


www.npl.co.uk
Overseas business risk:
Trade Statistics www.gov.uk/government/collections/
overseas-business-risk
HM Revenue and Customs (HMRC):
www.uktradeinfo.com/statistics/buildy- Transparency International:
ourowntables/pages/table.aspx www.transparency.org

National Statistics Information: UK Trade & Investment:


www.statistics.gov.uk/hub/index.html www.gov.uk/government/organisations/uk
-trade-investment
UK Trade Info:
www.gov.uk/government/organisations/uk UK Visas: www.gov.uk/government/
-trade-investment organisations/uk-visas-and-immigration

VFS Global:
www.vfsglobal.co.uk/china

Visit the Website and download the free Mobile App


World Bank Group economy rankings: Hong Kong Trade Development Council
www.doingbusiness.org/rankings (HKTDC): www.hktdc.com/en-buyer

World Economic Forum Global InvestHK: www.investhk.gov.hk


Competitiveness report:
www.weforum.org/reports/global- Law Society of Hong Kong: www.hklaw-
competitiveness-report-2014-2015 soc.org.hk/pub_e/lawfirmdirectory

Macau Trade and Investment Promotion


Hong Kong & Macau Institute (IPIM): www.ipim.gov.mo

British Business Association of Macau


(BBAM): www.britchammacao.org Taiwan

British Chamber of Commerce in Hong British Trade & Cultural Office, Taiwan:
Kong: www.britcham.com https://www.gov.uk/government/world/
taiwan
Hong Kong Business Licence Information
Service, Trade and Industry Department: Invest in Taiwan:
www.success.tid.gov.hk/tid/eng/blics/inde investtaiwan.nat.gov.tw/library/main_
x.jsp eng_general.jsp

Hong Kong Centre for Food Safety: British Chamber of Commerce in Taiwan
www.cfs.gov.hk/eindex.html (BCCT): www.bcctaipei.com

Hong Kong Companies Registry:


www.cr.gov.hk Mainland China

Hong Kong Customs: China National Certification and


www.customs.gov.hk Accreditation Administration (CNCA):
www.ccc-mark.com/lists-of-products-
Hong Kong Domain Name Registry: subject-to-ccc-mark.html
www.hkdnr.hk
Chinese Embassy (for Visa application):
Hong Kong Government Gazette: www.chinese-embassy.org.uk/eng/visa
www.gld.gov.hk/egazette/?lang=e&agree=0
Standardization Administration of the
Hong Kong Immigration Department: Peoples Republic of China:
www.immd.gov.hk www.sac.gov.cn/sac_en

Hong Kong Inland Revenue Department:


www.ird.gov.hk

Hong Kong Intellectual Property


Department: www.ipd.gov.hk

Hong Kong Labour Department:


www.labour.gov.hk

Hong Kong Trade & Industry Department:


www.success.tid.gov.hk/tid/eng/blics/inde
x.jsp

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Doing Business in China

Local Government Offices in Invest Chengdu:


mainland China www.chengduinvest.gov.cn

Baotou City Government: Dalian City Government: www.dl.gov.cn


www.baotou.gov.cn
Dalian Industrial and Commercial
Baotou Economic Commission: Administration Bureau: www.digs.gov.cn
www.btetc.gov.cn
Dongguan City Government:
Changchun Foreign Affairs Office: www.dongguan.gov.cn
en.changchun.gov.cn
Dongguan Administration of Industry and
Changchun Bureau of Commerce: Commerce: www.dgaic.gov.cn
www.ccmbc.gov.cn
Dongguan Foreign Promotion Centre:
Changchun Administration for Industry www.dgfipc.gov.cn
and Commerce: www.ccgs.gov.cn
Dongying City Government:
Changsha Municipal People's www.dongying.gov.cn
Government: www.changsha.gov.cn
Dongying Administration of Industry and
Invest in Changsha: www.csinvest.gov.cn Commerce: www.dygs.gov.cn

Changsha Commercial Bureau: Dongying Municipal Bureau of Commerce:


www.cstrade.gov.cn www.dongyingbusiness.gov.cn

Changsha Administration for industry Foshan City Government:


and Commerce: www.csaic.gov.cn www.foshan.gov.cn

Changzhou Ministry of Commerce: Foshan Administration of Industry and


www.changzhou.mofcom.gov.cn Commerce: www.fsaic.gov.cn

Changzhou City Government: Foshan Bureau of Foreign Trade and


www.changzhou.gov.cn Economic Cooperation:
www.fsboftec.gov.cn
Changzhou Administration of Industry
and Commerce: www.czgsj.gov.cn Hangzhou City Government:
www.hangzhou.gov.cn
Chengdu City Government:
www.chengdu.gov.cn/echengdu Hangzhou Administration of Industry and
Commerce: www.hzaic.gov.cn
Chengdu Administration of Industry and
Commerce: www.cdgs.gov.cn Hangzhou Municipal Trade and Economic
Cooperation Bureau: www.hzwjm.gov.cn

Visit the Website and download the free Mobile App


Harbin City Government: Ordos City Government:
www.harbin.gov.cn www.ordos.gov.cn

Harbin Administration of Industry and Ordos Administration of Industry and


Commerce: www.hrbgs.gov.cn Commerce: www.ordosgswj.gov.cn

Harbin Economic Cooperation Promotion Ordos Development and Reform


Bureau: www.hecpb.gov.cn Commission: www.ordosfgw.gov.cn

Hefei Foreign Affairs and Overseas Qingdao City Government:


Chinese Affairs Office: www.hfws.gov.cn www.qingdao.gov.cn

Hefei Foreign trade & Economic Qingdao Industrial and Commercial


Cooperation Bureau: www.hfboftec.gov.cn Bureau: www.gdaic.gov.cn

Henan Foreign and Overseas Chinese Qingdao Bureau of Commerce:


Affairs Office: www.hnfo.gov.cn www.qdbofcom.gov.cn

Jinan City Government: www.jinan.gov.cn Quanzhou City Government:


www.fiqz.gov.cn
Jinan Administration of Industry and
Commerce: www.jngsj.gov.cn Quanzhou Administration of Industry
and Commerce: www.qz.fjaic.gov.cn
Nanjing City Government:
www.nanjing.gov.cn Quanzhou Foreign Affairs Office:
www.wsqw.fjqz.gov.cn
Nanjing Administration of Industry and
Commerce: www.njgs.gov.cn Department of Commerce of Shandong
Province: www.shandongbusiness.gov.cn
Nanjing Foreign Affairs Office:
www.njfao.gov.cn Shaoxing City Government:
www.sx.gov.cn
Nantong City Government:
www.nantong.gov.cn Shaoxing Administration of Industry
and Commerce: www.sxgs.gov.cn
Nantong Administration of Industry and
Commerce: www.njgsj.gov.cn Shaoxing Municipal Foreign & Overseas
Chinese Office: www.sxwqb.gov.cn
Nantong Office of Foreign Affairs:
www.ntwqb.gov.cn Shenyang City Government:
www.shenyang.gov.cn
Ningbo City Government:
www.ningbo.gov.cn Shenyang Administration of Industry
and Commerce: www.sygsj.gov.cn
Ningbo Administration of Industry and
Commerce: www.nbaic.gov.cn Shijiazhuang City Government:
www.sjz.gov.cn
Ningbo Foreign Affairs Bureau:
www.nbfao.gov.cn

Ningbo Foreign Trade and Economic


Cooperation Bureau: www.nbfet.gov.cn

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Doing Business in China

Shijiazhuang Administration of industry Wenzhou City Government:


and Commerce: www.sjzgs.gov.cn www.wenzhou.gov.cn

Shijiazhuang Foreign Affairs Office: Wenzhou Foreign Affairs Office:


www.sjzfao.gov.cn www.wzfao.gov.cn

Suzhou City Government: Wenzhou Administration of Industry and


www.suzhou.gov.cn Commerce: www.wenzhou315.gov.cn

Suzhou Administration of Industry and Wuhan City Government:


Commerce: www.szsgsj.gov.cn www.wuhan.gov.cn

Suzhou Foreign Affairs Office: Wuhan Administration of Industry and


www.sfao.gov.cn Commerce: www.whhd.gov.cn

Tangshan City Government: Wuhan Foreign Affairs Office:


www.tangshan.gov.cn www.whfao.gov.cn

Tangshan Administration of Industry Wuxi City Government: www.wuxi.gov.cn


and Commerce: www.tsgsj.gov.cn
Wuxi Administration of Industry and
Tianjin Municipal Government: Commerce: www.wxgsj.gov.cn
www.tj.gov.cn
Wuxi Bureau of Commerce:
Tianjin Administration of Industry www.mofcom.wuxi.gov.cn
and Commerce: www.tjaic.gov.cn
Xiamen City Government: www.xm.gov.cn
Tianjin Foreign Service Company:
www.tjwf.com Xiamen Administration of Industry and
Commerce: www.xm.fjaic.gov.cn
Weifang City Government:
www.weifang.gov.cn Xiamen Investment Promotion Area:
www.xiameninvest.com
Weifang Administration of Industry and
Commerce: www.wfaic.gov.cn Xi'an City Government: www.xags.gov.cn

Weifang Foreign and Overseas Chinese Xi'an Administration of Industry and


Affairs Office: www.wqb.weifang.gov.cn Commerce: www.xags.goc.cn

Weihai City Government: Xi'an Economic Council:


www.weihai.gov.cn www.xaec.gov.cn

Weihai Administration of Industry and Yantai City Government:


Commerce: www.wh-aic.gov.cn www.yantai.gov.cn

Visit the Website and download the free Mobile App


Yantai Administration for Industry and British Expertise:
Commerce: www.ytaic.gov.cn www.britishexpertise.org

Yantai Foreign Affairs Office: Department for Business, Innovation


www.wsb.yantai.gov.cn & Skills (BIS):
www.gov.uk/government/organisations/
Zhengzhou City Government: department-for-business-innovation-skills
www.zhengzhou.gov.cn
UKTI e-exporting programme:
Zhengzhou Administration of Industry and www.gov.uk/e-exporting
Commerce: www.zzgs.gov.cn

Zibo City Government: www.zibo.gov.cn Trade Shows

Zibo Administration of Industry and A trade show is a method of promoting a


Commerce: www.zbgs.gov.cn business through the exhibition of goods
and services, an organised exhibition of
Zibo Foreign Affairs Office: products, based on a central theme,
www.zbfao.gov.cn where manufacturers meet to show their
products to potential buyers.

Additional Useful Links Taking part in overseas exhibitions is


an effective way for you to test markets,
UK Trade & Investment: attract customers, appoint agents or
www.gov.uk/ukti distributors and make sales. UKTI's
Tradeshow Access Programme (TAP)
Foreign & Commonwealth Office: provides grant support for eligible SME
www.gov.uk/fco firms to attend trade shows overseas.

British Council: Participation is usually as part of a group,


www.britishcouncil.org a great advantage for inexperienced
businesses, and is usually led by one
Trade Tariff: of UKTI's Accredited Trade Association
www.gov.uk/trade-tariff (ATOs). ATOs work with UKTI to raise the
profile of UK groups and sectors at key
British Chambers of Commerce: exhibitions.
www.britishchambers.org.uk
BizTradeShows.com online database:
IoD (Institute of Directors): www.biztradeshows.com/china
www.iod.com
British Expertise Events:
CBI (Confederation of British Industry): www.britishexpertise.org
www.cbi.org.uk
EventsEye.com online database:
Institute of Export (IOE): www.eventseye.com
www.export.org.uk
UKTI online events search facility:
UK Export Finance: www.events.ukti.gov.uk
www.gov.uk/making-exports-happen

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AND MAJOR CITES
www.China.DoingBusinessGuide.co.uk 197
CHINA

Disclaimer
Whereas every effort has been made to No liability is accepted by IMA, IOE, UKEF,
ensure that the information given in this CBBC, UKTI, the FCO or BIS for any loss
Guide is accurate, neither International or damage (whether consequential or
Market Advisor (IMA), Institute of Export otherwise) which may arise out of or in
(IOE), UK Export Finance (UKEF), the connection with the report. No warranty is
China-Britain Business Council (CBBC) given, or responsibility accepted as to the
or UK Trade & Investment (UKTI), nor its standing of any individual, firm, company
parent Departments, the Department for or other organisation mentioned.
Business, Innovation & Skills (BIS) or the
Foreign & Commonwealth Office (FCO), A range of UK Government support is
accept liability for any errors, omissions or available from a portfolio of initiatives
misleading statements and no warranty is called 'Solutions for Business'.
given or responsibility accepted as to the
standing of any individual, firm, company The "solutions" are available to qualifying
or other organisation mentioned. businesses and cover everything from
investment and grants through to specialist
The purpose of the Doing Business advice, collaborations and partnerships.
Guides, prepared by International Market
Advisor (IMA) is to provide information to Contains public sector information
help recipients form their own judgments licensed under the Open Government
about making business decisions as to Licence v3.0.
whether to invest or operate in a particular
country.

The report's contents were believed (at


the time that the report was prepared)
to be reliable, but no representations or
warranties, express or implied, are made
or given by IMA, IOE, UKEF, CBBC, UKTI
or its parent Departments (the Foreign
and Commonwealth Office (FCO) and the
(BIS) Department for Business, Innovation
and Skills) as to the accuracy of the
Report, its completeness or its suitability
for any purpose. In particular, none of the
Report's contents should be construed as
advice or solicitation to purchase or sell
securities, commodities or any other form
of financial instrument.
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